(Convenience Translation into English from the Original Previously Issued in Portuguese)

Biosev S.A.

Individual and Consolidated

Interim Financial Statements

For the Three-month Period Ended

June 30, 2020

Interim Financial Statements

June 30, 2020

CONTENTS

REVIEW REPORT OF INDEPENDENT AUDITOR'S .................................................................................

04

BALANCE SHEET .......................................................................................................................................

06

STATEMENT OF OPERATIONS .................................................................................................................

07

STATEMENT OF COMPREHENSIVE INCOME (LOSS) ............................................................................

08

STATEMENT OF CHANGES IN EQUITY ....................................................................................................

09

STATEMENT OF CASH FLOWS .................................................................................................................

10

STATEMENT OF VALUE ADDED ...............................................................................................................

11

NOTES

1.

GENERAL INFORMATION.......................................................................................................................

12

2.

SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES ...................................................................

13

3.

CASH AND CASH EQUIVALENTS ..........................................................................................................

14

4.

SHORT- AND LONG-TERM INVESTMENTS...........................................................................................

14

5.

TRADE RECEIVABLES............................................................................................................................

14

6.

INVENTORIES .........................................................................................................................................

15

7.

BIOLOGICAL ASSETS .............................................................................................................................

16

8.

RECOVERABLE TAXES ..........................................................................................................................

17

9.

ESCROW DEPOSITS...............................................................................................................................

17

10.

ASSETS AND LIABILITIES HELD FOR SALE .........................................................................................

18

11.

CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION .........................................

18

12.

LEASES....................................................................................................................................................

21

13.

INVESTMENTS (PROVISION FOR INVESTMENT LOSS) ......................................................................

23

14.

PROPERTY, PLANT AND EQUIPMENT..................................................................................................

25

15.

INTANGIBLE ASSETS .............................................................................................................................

26

16.

BORROWINGS AND FINANCING ...........................................................................................................

28

17.

TRADE PAYABLES ..................................................................................................................................

29

18.

TAXES PAYABLE.....................................................................................................................................

30

19.

PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES .............................

30

20.

RELATED PARTIES .................................................................................................................................

32

21.

EQUITY ....................................................................................................................................................

36

22.

NET REVENUE AND COST OF SALES AND SERVICES.......................................................................

37

23.

EXPENSES BY NATURE .........................................................................................................................

38

24.

FINANCE INCOME (EXPENSES) ............................................................................................................

39

25.

OTHER OPERATING INCOME (EXPENSES) .........................................................................................

39

26.

LOSS PER SHARE...................................................................................................................................

40

27.

RISK MANAGEMENT AND FINANCIAL INSTRUMENTS ........................................................................

40

(Convenience Translation into English from the Original Previously Issued in Portuguese)

INDEPENDENT AUDITOR'S REVIEW REPORT ON THE INTERIM FINANCIAL INFORMATION

To the

Board of Directors and Shareholders

Biosev S.A.

São Paulo - SP

Introduction

We have reviewed the accompanying individual and consolidated interim financial information of Biosev S.A. ("Company"), contained in the Quarterly Information Form - ITR for the quarter ended June 30, 2020, which comprises the statement of financial position as of June 30, 2020, and the respective statements of profit or loss, other comprehensive income, changes in equity and cash flows for the three-month period then ended, including the explanatory notes.

The Company´s management is responsible for the preparation of this individual and consolidated interim financial information in accordance with Technical Pronouncement CPC 21 (R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting, issued by International Accounting Standards Board (IASB), as well for the presentation of this information in accordance with standards issued by the Brazilian Securities and Exchange Commission, applicable to the preparation of Quarterly Information - ITR. Our responsibility is to express a conclusion on this interim financial information based on our review.

Scope of review

We conducted our review in accordance with the Brazilian and International standards on review engagements of interim financial information (NBC TR 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity and ISRE 2410 - Review of Interim Financial Information Performed by the Independent Auditor of the Entity, respectively). A review of interim financial information consists of making inquiries, primarily of persons responsible for the financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with the audit standards and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

Conclusion on the interim financial information

Based on our review, nothing has come to our attention that causes us to believe that the accompanying individual and consolidated interim financial information included in the Quarterly Information referred to above has not been prepared, in all material respects, in accordance with Technical Pronouncement CPC 21 (R1) and IAS 34, issued by IASB, applicable to the preparation of Quarterly Information - ITR, and presented in accordance with standards issued by the Brazilian Securities and Exchange Commission.

Emphasis of matter

Transactions with related parties

The Company and its subsidiaries have carried out significant transactions with related parties of the Louis Dreyfus Company Group. The effects on results of these transactions and the corresponding assets and liabilities are disclosed in note 20. Our opinion is not modified with respect to this matter.

4

Other matters

Statements of Value Added

The quarterly information referred to above includes the individual and consolidated statements of value added for the three-month period ended June 30, 2020. These statements are the responsibility of the Company's management and are presented as supplementary information under IAS 34. These statements have been subjected to review procedures performed together with the review of the interim accounting information for the purpose of concluding whether they are reconciled with the interim accounting information and accounting records, as applicable, and if their form and content are in accordance with the criteria defined in the accounting standard CPC 09 - "Statement of Value Added". Based on our review, nothing has come to our attention that causes us to believe that these statements of value added have not been properly prepared, in all material respects, in accordance with the criteria established in this accounting standard, and consistent with the individual and consolidated interim accounting information taken as a whole.

The accompanying individual and consolidated interim financial information has been translated into English for the convenience of readers outside Brazil.

São Paulo, September 17, 2020.

BDO RCS Auditores Independentes SS

CRC 2 SP 013846/O-1

Francisco de Paula dos Reis Júnior

Accountant CRC 1 SP 139268/O-6

5

Biosev S.A.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

-

-

-

-

BALANCE SHEET

AS AT JUNE 30, 2020

(In thousands of Brazilian reais - R$)

Company

Consolidated

Company

Consolidated

ASSETS

Note

06.30.20

03.31.20

06.30.20

03.31.20

LIABILITIES AND EQUITY

Note

06.30.20

03.31.20

06.30.20

03.31.20

CURRENT ASSETS

CURRENT LIABILITIES

Cash and cash equivalents

3

114,802

396,124

359,383

1,174,943

Borrow ings and financing

16

421,054

2,935,559

1,168,611

7,225,234

Short-term investments

4

58,701

42,052

69,858

52,245

Lease liabilities

12

200,569

215,257

477,464

498,932

Derivative financial instruments

27

93,131

225,787

97,252

225,787

Advances from domestic customers

112,114

7,611

140,694

28,128

Trade receivables

5

244,271

210,771

448,749

202,050

Advances from foreign customers

836,233

968,764

2,292,160

2,585,641

Inventories

6

1,368,611

1,105,650

2,755,825

2,948,633

Trade payables

17

316,809

309,104

690,168

798,903

Biological assets

7

404,900

303,621

775,238

663,908

Accrued payroll and related taxes

56,607

47,218

110,115

90,483

Recoverable taxes

8

66,001

50,274

153,299

158,777

Taxes payable

18

21,203

21,314

69,442

75,152

Other receivables

51,891

44,364

100,907

88,170

Derivative financial instruments

27

338,255

575,188

353,256

586,843

2,402,308

2,378,643

4,760,511

5,514,513

Other payables

68,228

80,594

114,509

118,051

Assets held for sale

10

Total current liabilities

37,777

45,165

37,777

45,165

2,371,072

5,160,609

5,416,419

12,007,367

Total current assets

2,440,085

2,423,808

4,798,288

5,559,678

NON-CURRENT ASSETS

Long-term receivables

NON-CURRENT LIABILITIES

Advances to suppliers

35,723

34,719

59,136

56,602

Borrow ings and financing

16

2,750,257

67,484

6,593,297

96,191

Escrow deposits

9

189,656

192,166

383,113

385,413

Lease liabilities

12

531,816

516,857

1,215,719

1,182,337

Recoverable taxes

8

10,784

11,502

82,003

57,529

Advances from foreign customers

20

845,311

802,505

-

626,116

Derivative financial instruments

27

-

-

-

55,885

Trade payables

17

4,622

5,733

4,857

5,965

Deferred income tax and social contribution

11.1

345,377

418,029

856,718

872,971

Deferred income tax and social contribution

11.1

-

-

36,383

36,883

Other receivables

306,082

335,939

319,104

320,012

Derivative financial instruments

27

-

-

17,563

16,596

Right to use the assets from lease operations

12

700,329

700,306

1,588,562

1,577,379

Provision for tax, labor, civil and enviromental contingencies

19

112,810

108,081

308,175

294,668

Investments

13

1,264,952

1,240,462

157,457

160,393

Taxes payable

18

18,324

18,501

18,324

18,501

Property, plant and equipment

14

1,542,181

1,635,433

3,266,705

3,477,391

Other payables

65,195

86,047

135,643

167,247

Intangible assets

15

10,456

11,856

920,138

921,964

Provision for investment loss

13

1,467,473

1,251,234

-

-

Total non-current assets

4,405,540

4,580,412

7,632,936

7,885,539

Total non-current liabilities

5,795,808

2,856,442

8,329,961

2,444,504

EQUITY

Capital

21

6,077,674

6,077,674

6,077,674

6,077,674

Capital reserve

21

1,353,937

1,353,937

1,353,937

1,353,937

Accumulated losses

(8,448,523)

(8,167,310)

(8,448,523)

(8,167,310)

Other comprehensive loss

(304,343)

(277,132)

(304,343)

(277,132)

Total equity attributable to the Company's ow ners

(1,321,255)

(1,012,831)

(1,321,255)

(1,012,831)

Non-controlling interests

-

-

6,099

6,177

Total equity

(1,321,255)

(1,012,831)

(1,315,156)

(1,006,654)

TOTAL ASSETS

6,845,625

7,004,220

12,431,224

13,445,217

TOTAL LIABILITIES AND EQUITY

6,845,625

7,004,220

12,431,224

13,445,217

The accompanying notes are an integral part of these interim financial statements.

6

Biosev S.A.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

STATEMENT OF OPERATIONS

FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)

Company

Consolidated

Three-month period

Three-month period

ended

ended

Note

06.30.20

06.30.19

06.30.20

06.30.19

NET REVENUE

22

935.830

1.002.036

2.669.626

1.718.364

Cost of sales and services

22 and 23

(676.028)

(837.691)

(2.258.454)

(1.487.628)

GROSS PROFIT

259.802

164.345

411.172

230.736

OPERATING INCOME (EXPENSES)

(223.339)

(240.956)

(185.621)

(217.837)

General, administrative and selling expenses

23

(42.500)

(52.637)

(154.667)

(109.237)

Equity in subsidiaries

13

(174.277)

(153.644)

(2.936)

(3.475)

Other operating income

25

6.348

3.497

8.414

8.409

Other operating expenses

25

(12.910)

(38.172)

(36.432)

(113.534)

OPERATING INCOME (LOSS) BEFORE FINANCE INCOME (COSTS)

36.463

(76.611)

225.551

12.899

Finance income

24

5.182

7.168

8.512

12.967

Finance costs

24

(83.382)

(74.789)

(160.221)

(149.531)

Derivatives

24

2.980

41.243

49.376

9.279

Exchange rate changes

24

(171.329)

40.866

(383.428)

76.284

LOSS BEFORE TAXES

(210.086)

(62.123)

(260.210)

(38.102)

INCOME TAX AND SOCIAL CONTRIBUTION

11.2

(71.127)

(106.698)

(21.081)

(130.792)

LOSS FOR THE PERIOD

(281.213)

(168.821)

(281.291)

(168.894)

Attributable to:

Company's ow ners

26

(281.213)

(168.821)

(281.213)

(168.821)

Non-controlling interests

-

-

(78)

(73)

LOSS PER SHARE - R$

Basic

26

(0,59327)

(0,43694)

(0,59327)

(0,43694)

Diluted

26

(0,59327)

(0,43694)

(0,59327)

(0,43694)

7

The accompanying notes are an integral part of these interim financial statements.

Biosev S.A.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

STATEMENT OF COMPREHENSIVE INCOME (LOSS) FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)

Company

Three-month period ended

Consolidated

Three-month period ended

Note

06.30.20

06.30.19

06.30.20

06.30.19

LOSS FOR THE YEAR

(281.213)

(168.821)

(281.291)

(168.894)

OTHER COMPREHENSIVE INCOME (LOSS)

Items subsequently reclassified to profit or loss:

Financial instruments - hedge accounting of futures

27

(48.611)

20.778

(48.611)

20.778

Financial instruments - hedge accounting of Libor sw ap

27

(934)

(6.205)

(934)

(6.205)

Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF)

27

(10.164)

(19.111)

(10.164)

(19.111)

Financial instruments - hedge accounting of exchange differences

27

18.481

33.868

18.481

33.868

Deferred income tax and social contribution related to components of other comprehensive income (loss)

11.3

14.017

(9.972)

14.017

(9.972)

(27.211)

19.358

(27.211)

19.358

COMPREHENSIVE LOSS FOR THE PERIOD

(308.424)

(149.463)

(308.502)

(149.536)

Attributable to:

Company's ow ners

(308.424)

(149.463)

(308.424)

(149.463)

Non-controlling interests

-

-

(78)

(73)

The accompanying notes are an integral part of these interim financial statements.

8

Biosev S.A.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

STATEMENT OF CHANGES IN EQUITY

FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)

Other

Capital

comprehensive

Accumulated

Non-controlling

Total consolidated

Capital

reserve

income (loss)

losses

Company's equity

interests

equity

BALANCES AS AT MARCH 31, 2019

6,077,674

1,353,937

(287,906)

(6,617,139)

526,566

6,280

532,846

Loss for the period

-

-

-

(168,821)

(168,821)

(73)

(168,894)

Other comprehensive income (loss):

Adjusted derivatives (hedge accounting), net of taxes

-

-

19,358

-

19,358

-

19,358

Comprehensive income (loss) for the period

-

-

19,358

(168,821)

(149,463)

(73)

(149,536)

BALANCES AS AT JUNE 30, 2019

6,077,674

1,353,937

(268,548)

(6,785,960)

377,103

6,207

383,310

BALANCES AS AT MARCH 31, 2020

6,077,674

1,353,937

(277,132)

(8,167,310)

(1,012,831)

6,177

(1,006,654)

Loss for the period

-

-

-

(281,213)

(281,213)

(78)

(281,291)

Other comprehensive income (loss):

Adjusted derivatives (hedge accounting), net of taxes

-

-

(27,211)

-

(27,211)

-

(27,211)

Comprehensive loss for the period

-

-

(27,211)

(281,213)

(308,424)

(78)

(308,502)

BALANCES AS AT JUNE 30, 2020

6,077,674

1,353,937

(304,343)

(8,448,523)

(1,321,255)

6,099

(1,315,156)

The accompanying notes are an integral part of these interim financial statements.

9

Biosev S.A.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

STATEMENT OF CASH FLOWS

FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)

Company

Three-month period ended

Consolidated

Three-month period ended

Note

06.30.20

06.30.19

06.30.20

06.30.19

CASH FLOW FROM OPERATING ACTIVITIES

Loss for the period

(281.213)

(168.821)

(281.291)

(168.894)

Non-cash transactions:

-

-

-

-

Depreciation and amortization

23

220.965

236.092

453.749

436.155

Income (loss) from sale of property, plant and equipment

25

56

(504)

(613)

(5.428)

Equity in subsidiaries

13

174.277

153.644

2.936

3.475

Interest, exchange rate changes and inflation adjustments, net

213.162

23.711

488.385

56.974

Exchange, interest rate and commodities risk management

160.966

164.187

135.302

174.662

Recognition of provision for tax, labor, civil and enviromental contingencies

6.142

7.537

27.123

25.506

Recognition (reversal) of estimated losses on doubtful accounts

5

7

389

(231)

590

Income from sale of intangible asset

15

141

-

251

-

Reversal of impairment loss

14

(141)

(376)

(260)

(1.704)

Impairment of assets held for sale

10

(119)

21.060

(119)

21.114

Provision for other losses

25

27

122

3.762

58.740

Recognition (reversal) of allow ance for negative margin and

realization of storeroom inventories

6

10.382

(2.278)

14.139

(1.433)

Losses (gains) on changes in fair value less estimated costs to sell biological assets

22 and 23

(177.049)

(71.508)

(213.829)

(93.397)

Deferred income tax and social contribution

11.2

77.669

106.698

29.770

133.575

Hedge operations

(32.228)

17.145

(41.228)

29.330

Derecognition of operating leases

3.568

-

7.468

-

376.612

487.098

625.314

669.265

Decrease (increase) in assets:

Trade receivables

5

(33.026)

(54.593)

(245.789)

(171.847)

Inventories

6

(140.301)

(368.101)

402.255

(1.109.780)

Derivative financial instruments

27

132.656

(20.635)

184.420

(29.768)

Escrow deposits

9

2.510

(7.121)

2.300

(6.757)

Recoverable taxes

8

(15.009)

7.613

(18.996)

4.321

Advances to suppliers

(1.004)

(480)

(2.534)

(5.667)

Other receivables

22.303

(25.579)

(15.591)

(4.412)

(31.871)

(468.896)

306.065

(1.323.910)

Increase (decrease) in liabilities:

Trade payables

17

6.672

(61.352)

(109.713)

(106.401)

Advances from foreign customers

(89.725)

292.211

(919.597)

812.072

Accrued payroll and related taxes

9.389

3.525

19.632

5.861

Taxes payable

18

(288)

(6.402)

(5.887)

(23.743)

Advances from domestic customers

104.503

5.098

112.566

3.792

Payments of labor, civil, tax and environmental contingencies

19

(1.413)

(1.523)

(13.616)

(5.484)

Derivative financial instruments

27.1

(397.899)

(300.134)

(367.922)

(304.709)

Other payables

(33.218)

(30.661)

(35.146)

(40.630)

(401.979)

(99.238)

(1.319.683)

340.758

Cash used in operating activities, net interest

(57.238)

(81.036)

(388.304)

(313.887)

Interest on borrow ings and financing

(48.854)

(68.514)

(91.124)

(157.889)

Cash used in operating activities

(106.092)

(149.550)

(479.428)

(471.776)

CASH FLOW FROM INVESTING ACTIVITIES

Decrease (increase) in short- and long-term investments

4

(16.577)

18.743

(17.484)

67.830

Decrease (increase) in investments (provision for investment loss)

13

17.472

(27.653)

-

-

Additions to lease agreements

12

(52.406)

(707.460)

(136.139)

(1.617.191)

Increase in property, plant and equipment

14

(59.204)

(37.147)

(117.123)

(95.124)

Additions to biological assets

7

(71.420)

(63.210)

(126.968)

(113.227)

Additions to intangible assets

15

(189)

(5.585)

(190)

(6.475)

Cash used in investing activities

(182.324)

(822.312)

(397.904)

(1.764.187)

CASH FLOW FROM FINANCING ACTIVITIES

Additions to lease operations

12

52.487

707.460

136.170

1.617.191

Payment of lease operations

12

(66.348)

(54.165)

(155.783)

(136.814)

Borrow ings and financing

16

492.784

809.392

859.770

1.912.948

Payment of borrow ings and financing

16

(471.829)

(862.904)

(778.384)

(1.921.867)

Cash provided by financing activities

7.094

599.783

61.773

1.471.458

DECREASE IN CASH AND CASH EQUIVALENTS

(281.322)

(372.079)

(815.559)

(764.505)

Cash and cash equivalents at the beginning of the period

3

396.124

577.523

1.174.943

1.189.112

Cash and cash equivalents at the end of the period

3

114.802

205.444

359.384

424.607

Non-cash items

Transfer of depreciation and amortization to inventories

109.089

46.774

219.442

163.524

Transfer of assets and liabilities to held for sale - Estivas plant

7.506

21.060

7.506

17.609

Acquisition of financed property, plant and equipment

-

22.241

-

49.205

The accompanying notes are an integral part of these interim financial statements.

10

Biosev S.A.

(Convenience Translation into English from the Original Previously Issued in Portuguese)

STATEMENT OF VALUE ADDED

FOR THE THREE-MONTH PERIOD ENDED JUNE 30, 2020 (In thousands of Brazilian reais - R$)

Company

Consolidated

Three-month period

Three-month period

ended

ended

Note

06.30.20

06.30.19

06.30.20

06.30.19

1

- REVENUE

965.225

1.062.551

2.736.124

1.852.699

1.1)

Sales

22

958.884

1.059.443

2.727.479

1.844.880

1.2)

Reversal of estimated losses on doubtful accounts

25

(7)

(389)

231

(590)

1.3)

Other operating income

25

6.348

3.497

8.414

8.409

2

- INPUTS PURCHASED FROM THIRD PARTIES

(392.284)

(530.503)

(1.691.056)

(960.488)

2.1)

Cost of sales and services

(13.251)

(45.471)

(229.979)

(248.810)

2.2)

Materials, electric pow er, external services and other

(556.082)

(556.540)

(1.674.906)

(805.075)

2.3) Gains on changes in fair value of biological assets and other

177.049

71.508

213.829

93.397

3

- GROSS VALUE ADDEED (1-2)

572.941

532.048

1.045.068

892.211

4

- DEPRECIATION AND AMORTIZATION

23

(220.965)

(236.092)

(453.749)

(436.155)

5

- VALUE ADDED CREATED BY THE ENTITY (3-4)

351.976

295.956

591.319

456.056

6

- VALUE ADDED RECEIVED IN TRANSFER

(166.114)

(105.233)

54.951

18.771

6.1)

Equity in subsidiaries

13

(174.277)

(153.644)

(2.936)

(3.475)

6.2)

Finance income

8.163

48.411

57.887

22.246

7

- VALUE ADDED FOR DISTRIBUTION (5+6)

185.862

190.723

646.270

474.827

8

- DISTRIBUTION OF VALUE ADDED

185.862

190.723

646.270

474.827

8.1)

Personnel and payroll taxes

23

53.592

88.229

145.899

153.445

Direct compensation

33.047

67.120

97.294

106.116

Benefits

14.783

14.084

35.524

32.262

Severance pay fund (FGTS)

5.762

7.025

13.081

15.067

8.2)

Taxes, rates and contributions

99.063

163.552

85.088

257.232

Federal

82.322

124.396

54.644

185.466

State

16.724

39.154

30.419

71.752

Municipal

17

2

25

14

8.3)

Third-party capital use

314.420

107.763

696.574

233.044

Rentals

59.708

73.840

152.926

159.797

Interest and exchange rate changes

254.712

33.923

543.648

73.247

8.4)

Equity capital

(281.213)

(168.821)

(281.291)

(168.894)

Loss for the period

(281.213)

(168.821)

(281.291)

(168.894)

The accompanying notes are an integral part of these interim financial statements.

11

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

1. GENERAL INFORMATION

Biosev S.A. ("Company"), a publicly-held company headquartered at Avenida Brigadeiro Faria Lima, 1355, 11º andar, Pinheiros, São Paulo, SP, and its subsidiaries (hereinafter referred to as, collectively, "Group") are mainly engaged in the production, processing and sale of agricultural products, primarily sugarcane and its by-products; the agricultural operations in Company-owned or third-party land; the export, import and sale of petroleum by-products, lubricants, fuel, grease and hydrated ethyl alcohol; the purchase, sale, import and export of agricultural products and its by-products; and the generation and sale of electricity and its by-products.

The Group comprises the activities of Biosev S.A. and Biosev Bioenergia S.A. ("Biosev Bioenergia"), based in Brazil, and Biosev Bioenergia International S.A. ("Biosev Bioenergia International"), based in Switzerland. Additionally, the Group consists of the subsidiaries of such companies, including Biosev Comercializadora S.A., a special-purpose entity established to sell ethanol by-products, sugar and electric power arising from the cogeneration assets of the Santa Elisa and Passa Tempo units, located in the State of São Paulo and State of Mato Grosso do Sul, respectively.

The Group is organized in industrial clusters, composed as follows, with their corresponding branches:

  • North Ribeirão Preto Agri-Industrial Cluster: Continental (located in the State of São Paulo) and Lagoa da Prata (located in the State of Minas Gerais) plants;
  • South Ribeirão Preto Agri-Industrial Cluster: Santa Elisa, Leme, Vale do Rosário and MB (Morro Agudo) (located in the State of São Paulo) plants;
  • Mato Grosso do Sul Agri-Industrial Cluster: Passa Tempo and Rio Brilhante (located in the State of Mato Grosso do Sul) plants.

Biosev S.A. is a company of the Louis Dreyfus Company Group, directly controlled by Hédera Investimentos e Participações Ltda., which holds 79.43% of its shares.

The Company's Management had adopted measures to adjust the debt profile. Specifically, the Company has maintained its strategy to maximize the use of its assets, aligned with strict financial discipline, in order to increase the operational efficiency and the generation of positive free cash flow.

The Company has recorded net losses in the year ended June 30, 2020, mainly by virtue of the negative foreign exchange effects on foreign currency-denominated debts. The Company recorded net losses of R$281,213 as at June 30, 2020. The Company's capacity to continue as a going concern depends on the obtaining of additional capital, renewal and extension of the credit facilities and, finally, generation of profitable transactions. Specifically, the Company's and its subsidiaries' debt levels may significantly impact the business, inclusive in relation to working capital financing and recurring capital disbursements, taking into account the necessary funds to pay the debt service. In addition, out of R$2,292,160, in Consolidated, recorded in current liabilities, in line item "Advances from foreign customers", R$1,732,798 refers to advances to commodities export performance operations with related parties. Moreover, the amount of R$1,743,998, in Consolidated, was recorded in current assets, in line item "Inventories - advances to related-party suppliers". For further information, see Note 20.

Although there is no guarantee that the Company will be able to generate sufficient cash flow to finance the transactions and pay its debt, Management continues to implement actions to improve the operational activities and reduce costs and expenses, in addition to the negotiations in progress with the financial institutions that historically have supported the Company's activities. The Company's Management expects that the improvement actions, current cash balances, favorable liquidity developments and available credit facilities, and results from operations are sufficient to meet the working capital, capital expenses, debt service and other needs for the next year.

Should the Company is not able to generate sufficient cash to conduct the transactions in progress, the Company may need to seek for additional debt financing. The Company may fully or partially refinance its debt, which may be more costly, in addition to all other impacts.

12

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Covid-19 effects

In connection with the financial statements as at March 31, 2020, the Company continues to comply with all guidelines to prevent Covid-19 disclosed by the proper health bodies and maintain the measures to mitigate the risk of transmission of Covid-19 in work places.

Although the pandemic has not been fully eradicated, the Brazilian authorities began to loosen the restrictions, and the Company believes that the pandemic effects in the global economy has begun to be mitigated. As of the date, the Company has not identified significant effects on its operations; therefore, the Company has maintained the estimated production, sales and delivery of products. The agro industrial sector is deemed an essential activity by virtue of the essential supplies produced to the population, relating to the meal and transportation segments. In addition, there was no change in the measurement of the economic and financial impacts from Covid-19, as disclosed in the financial statements as at March 31, 2020.

2. SUMMARY OF SIGNIFICANT ACCOUNTING PRACTICES

2.1 Statement of compliance and basis of preparation

The individual and consolidated interim financial statements have been prepared and is presented in accordance with CPC 21 (R1) - Interim Financial Reporting and IAS 34 - Interim Financial Reporting issued by the International Accounting Standards Board (IASB).

These interim financial statements are presented in accordance with the standards issued by the Brazilian Securities and Exchange Commission (CVM), applicable to the preparation of Interim Financial Information (ITR).

The preparation of the individual and consolidated interim financial statements under CPC 21 (R1) and IAS 34 requires the use of certain critical accounting estimates by the Company's Management. The interim financial statements have been prepared based on the historical cost, except for certain financial instruments, held-for-sale assets and biological assets measured at their fair values. The historical cost is generally based on the fair value of the consideration paid in exchange for assets on the transaction date.

Management undertakes that all relevant information related to the interim financial statements, and only such information, is being highlighted and corresponds to the information used by Management in its management.

The accounting practices and methods of calculating estimates adopted in the interim accounting information are the same as those applied in the preparation of the annual financial statements for the year ended March 31, 2020, filed with the CVM, and therefore should be read together.

2.1.1 New standards, changes and interpretations of standards

CPC 06 (R2)/IFRS 16 - Leases

The aforementioned pronouncement was changed as a result of the granting of benefits related to COVID-19 to tenants under lease agreements. The Company analyzed the content of this pronouncement and did not identify any impacts, since the clauses of the current lease agreements remain unchanged.

13

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

3. CASH AND CASH EQUIVALENTS

CompanyConsolidated

06.30.20

03.31.20

06.30.20

03.31.20

Cash and banks

28,607

21,625

207,083

364,024

Short-term investments

41,288

3,004

70,792

41,792

Debentures

44,907

371,495

81,508

769,127

114,802

396,124

359,383

1,174,943

Short- and long-term investments refer to floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 95% to 96% of the Interbank Deposit Rate (CDI) as at June 30, 2020 (95% to 96% as at March 31, 2020). The CDBs investments are subject to repurchase commitments by the financial institutions issuers and/or custodians.

Debentures not subject to Tax on Financial Transactions (IOF) are issued from local prime financial institutions indexed at rates ranging from 70% to 75% of the CDI rate as at June 30, 2020 (73% to 80% as at March 31, 2020).

4. SHORT- AND LONG-TERM INVESTMENTS

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Short-term investments

58,701

42,052

69,858

52,245

58,701

42,052

69,858

52,245

Short- and long-term investments refer to restricted deposits and are operations represented by (i) floating rate Certificates of Bank Deposit (CDBs) and/or CDBs indexed at rates ranging from 70% to 96% of the Interbank Deposit Rate (CDI) as at June 30, 2020 (95% to 96% as at March 31, 2020); (ii) margin deposits in derivative transactions; and (iii) foreign currency- denominated deposits related to prepayments of exports indexed at average rate of 0.10% p.a. performed by subsidiary Biosev Bioenergia Internacional S.A. These deposits may be considered, together with future agricultural production and sugar and ethanol inventories, for purposes of calculation of the indices set forth in the prepaid export agreements.

5. TRADE RECEIVABLES

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Related parties (Note 20)

In Brazil

12,131

7,498

557

-

Abroad

180,902

133,503

219,167

2,505

193,033

141,001

219,724

2,505

Third parties

In Brazil

45,858

67,955

109,446

191,167

Abroad

6,153

2,581

133,540

22,570

52,011

70,536

242,986

213,737

245,044

211,537

462,710

216,242

(-) Estimated loss for doubtful accounts

(773)

(766)

(13,961)

(14,192)

244,271

210,771

448,749

202,050

14

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The aging list of overdue receivables is as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Overdue

Up to 30 days

33,991

24,648

108,765

3,457

31 to 60 days

24,982

2,083

687

6,462

61 to 90 days

1,565

20,887

784

452

91 to 180 days

435

20,455

742

325

Over 180 days

735

17,001

16,186

16,874

61,708

85,074

127,164

27,570

The change in the estimated loss for doubtful accounts is as follows:

At the beginning of the period/year

Reversal (recognition) of estimated loss for doubtful accounts

CompanyConsolidated

06.30.20

03.31.20

06.30.20

03.31.20

(766)

(175)

(14,192)

(13,395)

(7)

(591)

231

(797)

(773)

(766)

(13,961)

(14,192)

6.

INVENTORIES

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Finished products

Sugar

113,666

4,218

303,235

14,838

Ethanol

207,851

20,676

448,646

79,839

Sugar syrup

1,313

317

2,117

1,241

Other

70

247

258

331

Allow ance for negative inventory margin

(13,767)

(3,298)

(29,833)

(18,985)

309,133

22,160

724,423

77,264

Raw materials and packaging materials

560

1,033

624

1,166

Storeroom supplies

53,130

37,492

105,961

76,476

Allow ance for realization of storeroom inventories

(4,032)

(4,119)

(10,388)

(7,097)

Advances to suppliers (*)

1,009,820

1,049,084

1,935,205

2,800,824

1,059,478

1,083,490

2,031,402

2,871,369

1,368,611

1,105,650

2,755,825

2,948,633

  1. Out of the total amount as at June 30, 2020, R$88.469, in Company, and R$191,207 in Consolidated (R$105.192 and R$223,699 as at March 31, 2020, respectively), refer to advances to sugarcane suppliers that are adjusted on a monthly basis according to the specific conditions and indices set forth in the agreements, and R$921,351, in Company, and R$1,743,998 in Consolidated (R$943,892, in Company, and R$2.577.125, in Consolidated, as at March 31, 2020), refer to advances to export of commodities, as described in Note 20.

15

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The changes in the allowance for negative inventory margin and realization of storeroom inventories are broken down as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Negative inventory margin

Opening balance

(3,298)

(7,410)

(18,985)

(25,793)

Additions

(13,767)

(3,298)

(29,833)

(18,985)

Reversals

3,298

7,410

18,985

25,793

(13,767)

(3,298)

(29,833)

(18,985)

Realization of storeroom inventories

Opening balance

(4,119)

(3,568)

(7,097)

(5,818)

Additions

(4,032)

(4,119)

(10,388)

(7,097)

Reversals

4,119

3,568

7,097

5,818

(4,032)

(4,119)

(10,388)

(7,097)

The allowance for negative inventory margin is calculated by analyzing the average production cost of finished products as compared to their realizable value in the market, less costs to sell.

The allowance for realization of storeroom inventories, considering obsolete and slow-moving items, is recognized on a quarterly basis based on inventory management procedure of storeroom inventories duly approved by the Company.

7. BIOLOGICAL ASSETS

Opening balance

Increases arising from expenses on sugarcane crops and crop treatments

CompanyConsolidated

06.30.20 03.31.20 06.30.20 03.31.20

303,621

264,480

663,908

501,124

145,533

430,597

334,089

911,744

449,154

695,077

997,997

1,412,868

Gains (losses) on changes in fair value less estimated costs to sell

177,049

120,821

213,829

222,448

Transfer to assets held for sale

478

(13,682)

478

(13,682)

Sugarcane harvest at fair value in the year/period

(221,781)

(490,374)

(436,020)

(945,620)

Write-off

-

(8,221)

(1,046)

(12,106)

404,900

303,621

775,238

663,908

The following assumptions were used to determine the fair value:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Estimated harvest area (in hectares)

127.949

123.816

227.512

222.421

Expected yields (in ton of sugarcane per hectare)

87,50

85,88

89,80

89,07

Total volume of recoverable sugar (in kilogram per ton of sugarcane)

129,66

126,29

132,07

129,90

Value of a kilogram of total recoverable sugar (in R$) - CONSECANA

0,68

0,66

0,68

0,66

Discount rate

10,21%

10,21%

10,21%

10,21%

As at June 30, 2020, the Company provided as guarantee for the export prepayment 158,608 hectares (158,608 hectares as at March 31, 2020), equivalent to approximately 14,243,087 tons of sugarcane (14,127,348 as at March 31, 2020), at fair value of R$540,451 (R$473,432 as at March 31, 2020). Such prepayment falls due between March 2023 and April 2023.

16

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

8.

RECOVERABLE TAXES

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

State VAT (ICMS)

38,970

39,859

59,283

60,952

Taxes on revenue (PIS and COFINS) (a)

25,081

16,166

85,984

75,050

Witholding Income Tax (IRRF) on short-term investments and

9,929

2,978

65,258

55,466

prepayments

Tax on manufactured products (IPI) and other taxes

2,805

2,773

24,777

24,838

76,785

61,776

235,302

216,306

Current assets

66,001

50,274

153,299

158,777

Non-current assets

10,784

11,502

82,003

57,529

  1. Refers to taxes on revenues (PIS and COFINS) relating to: (i) Law 10637/02; (ii) Law 10833/03; (iii) Law 11774/200; and (iv) Law 13043/14.

9.

ESCROW DEPOSITS

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Civil

3,490

3,500

7,770

7,365

Environmental

2,199

2,442

7,290

7,548

5,689

5,942

15,060

14,913

Tax

Tax on manufactured products (IPI)

-

-

18,704

18,673

Income tax (IRPJ) and social contribution (CSLL)

16,273

16,235

33,311

33,262

ICMS, PIS and COFINS

9,818

9,758

46,025

46,344

Social security contributions

21,843

21,738

27,546

27,419

Other

-

-

3,026

3,054

47,934

47,731

128,612

128,752

Tax

Labor appeals

136,033

138,493

239,441

241,748

136,033

138,493

239,441

241,748

189,656

192,166

383,113

385,413

The changes in the Company's escrow deposits are as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Opening balance

192,166

210,108

385,413

367,388

Additions

3,547

31,563

5,700

81,534

Offsets/redemptions

(6,057)

(49,505)

(8,000)

(63,509)

189,656

192,166

383,113

385,413

17

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

10. ASSETS AND LIABILITIES HELD FOR SALE

Company and Consolidated

06.30.20

03.31.20

Assets held for sale

37,777

45,165

37,777

45,165

The breakdown of assets and liabilities classified as held for sale is as follows:

Maracaju

Company and Consolidated

Note

plant

06.30.20

03.31.20

Assets

Biological assets

7

426

426

904

Fixed assets

14

112,086

112,086

119,114

Impairment losses

14

(74,735)

(74,735)

(74,853)

Total assets

37,777

37,777

45,165

11. CURRENT AND DEFERRED INCOME TAX AND SOCIAL CONTRIBUTION

11.1 Deferred income tax and social contribution assets and liabilities disclosed in balance sheet

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Deferred income tax and social contribution assets

345,377

418,029

856,718

872,971

Deferred income tax and social contribution liabilities

-

-

(36,383)

(36,883)

345,377

418,029

820,335

836,088

11.2 Income tax and social contribution recognized in profit or loss for the period

Results from current income tax and social contribution

Results from deferred income tax and social contribution related to the origin and reversal of temporary differences and tax loss carryforw ards

CompanyConsolidated

06.30.20

06.30.19

06.30.20

06.30.19

6,542

-

8,689

2,783

(77,669)

(106,698)

(29,770)

(133,575)

(71,127)

(106,698)

(21,081)

(130,792)

11.3 Income tax and social contribution recognized in other comprehensive income (loss)

Results from deferred income tax and social contribution recognized in other comprehensive income (loss):

Financial instruments - hedge accounting of futures

Financial instruments - hedge accounting of Sw ap Libor

Financial instruments - hedge accounting of Non-Deliverable Forw ard (NDF) Financial instruments - hedge accounting of exchange differences

CompanyConsolidated

06.30.20

06.30.19

06.30.20

06.30.19

4,146

(722)

16,528

(7,065)

-

-

317

2,110

871

2,935

3,456

6,498

-

-

(6,284)

(11,515)

5,017

2,213

14,017

(9,972)

Effects on subsidiaries

9,000

(12,185)

-

-

14,017

(9,972)

14,017

(9,972)

18

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

11.4 Reconciliation of income tax and social contribution expenses at statutory and effective rates

Company

Consolidated

06.30.20

06.30.19

06.30.20

06.30.19

Results before taxation

(210.086)

(62.123)

(260.210)

(38.102)

Statutory rate

34%

34%

34%

34%

Income from income tax and social contribution at statutory rate

71.429

21.122

88.471

12.955

Equity in subsidiaries

(59.254)

(52.239)

(998)

(1.182)

Unrecognized deferred income tax and social contribution credits

(76.031)

(76.751)

(104.180)

(135.669)

Tax revenue (grants)

4.422

9.124

4.422

9.124

Rate difference of foreign subsidiary

-

-

6.088

97

Subcapitalization rules

(7.750)

(5.739)

(14.326)

(15.208)

Other

(3.943)

(2.215)

(558)

(909)

Income from income tax and social contribution at effective rate

(71.127)

(106.698)

(21.081)

(130.792)

11.5 Balances of deferred income tax and social contribution assets and liabilities

Recognized in

Recognized in other

Closing

Opening balance

profit or loss for

comprehensive

balance as at

Company

as at 03.31.20

the period

income (loss)

06.30.20

Temporary differences:

Provision for tax, labor, civil and environmental contingencies

37,028

1,608

-

38,636

Adjustment at fair value of biological assets

(16,585)

(52,306)

-

(68,891)

Other receivables (AVP)

14,162

(914)

13,248

Hedge accounting of Libor sw ap, NDF and exchange rate changes

63,527

14,967

5,017

83,511

Unrealized exchange rate changes

412,077

30,438

-

442,515

Amortization of tax goodw ill

(245,277)

-

-

(245,277)

Accelerated depreciation

(39,048)

(11,144)

(50,192)

Impairment of fixed assets

65,310

(88)

-

65,222

Mark-to-market of derivatives

2,363

(55,618)

-

(53,255)

Impairment of assets held for sales

10,859

40

10,899

Other

11,661

(4,652)

-

7,009

316,077

(77,669)

5,017

243,425

Unutilized tax losses and credits

Tax loss carryforw ards

74,616

-

-

74,616

Social contribution tax loss carryforw ards

27,336

-

-

27,336

418,029

(77,669)

5,017

345,377

19

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Recognized in

Recognized in other

Closing

Opening balance

profit or loss for

comprehensive

balance as at

Company

as at 03.31.19

the period

income (loss)

06.30.19

Temporary differences:

Provision for tax, labor, civil and environmental contingencies

47,227

2,045

-

49,272

Adjustment at fair value of biological assets

(15,389)

(18,165)

-

(33,554)

Other receivables (AVP)

1,795

(139)

-

1,656

Hedge accounting of Libor sw ap, NDF and exchange rate changes

7,817

3,111

2,213

13,141

Unrealized exchange rate changes

209,867

(36,712)

-

173,155

Amortization of tax goodw ill

(245,277)

-

-

(245,277)

Accelerated depreciation

(25,179)

(8,522)

-

(33,701)

Impairment

65,746

(59)

-

65,687

Mark-to-market of derivatives

(16,095)

(52,561)

-

(68,656)

Impairment of assets held for sales

18,003

7,160

-

25,163

Other

26,074

(2,856)

-

23,218

74,589

(106,698)

2,213

(29,896)

Unutilized tax losses and credits

Tax loss carryforw ards

74,616

-

-

74,616

Social contribution tax loss carryforw ards

27,336

-

-

27,336

176,541

(106,698)

2,213

72,056

Recognized in

Recognized in other

Closing

Opening balance

profit or loss for

comprehensive

balance as at

Consolidated

as at 03.31.20

the period

income (loss)

06.30.20

Temporary differences:

Provision for tax, labor, civil and environmental contingencies

100,468

4,592

-

105,060

Adjustment at fair value of biological assets

(71,630)

(67,396)

-

(139,026)

Other receivables (AVP)

14,162

(914)

-

13,248

Hedge accounting of Libor sw ap, NDF and exchange rate changes

159,955

-

14,017

173,972

Unrealized exchange rate changes

827,139

75,456

-

902,595

Amortization of tax goodw ill

(245,277)

-

-

(245,277)

Accelerated depreciation

(39,048)

(11,144)

-

(50,192)

Mark-to-market of derivatives

(10,244)

(31,121)

-

(41,365)

Impairment of property, plant and equipment

76,443

(127)

-

76,316

Appreciation of acquired assets

(231,020)

3,530

-

(227,490)

Impairment of fixed assets

906

-

-

906

Fair value of financial debts

1,161

(1,161)

-

-

Leases

35,367

205

-

35,572

Other

60,563

(2,618)

-

57,945

678,945

(30,698)

14,017

662,264

Unutilized tax losses and credits

Tax loss carryforw ards

115,532

682

-

116,214

Social contribution tax loss carryforw ards

41,611

246

-

41,857

836,088

(29,770)

14,017

820,335

20

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Recognized in

Recognizd in other

Closing

Opening balance

profit or loss for

comprehensive

balance as at

Consolidated

as at 03.31.19

the period

income (loss)

06.30.19

Temporary differences:

Provision for tax, labor, civil and environmental contingencies

97,941

6,807

-

104,748

Adjustment at fair value of biological assets

(32,728)

(36,955)

-

(69,683)

Hedge accounting of Libor sw ap, NDF and exchange rate changes

165,790

-

(9,972)

155,818

Amortization of tax goodw ill

(245,277)

-

-

(245,277)

Accelerated depreciation

(25,179)

(8,522)

-

(33,701)

Mark-to-market of derivatives

(82,228)

(44,447)

-

(126,675)

Appreciation of acquired assets

(253,050)

4,537

-

(248,513)

Impairment of fixed assets

18,896

7,173

-

26,069

Fair value of financial debts

1,161

-

-

1,161

Other

50,545

18,616

-

69,161

214,231

(133,575)

(9,972)

70,684

Unutilized tax losses and credits

Tax loss carryforw ards

109,760

-

-

109,760

Social contribution tax loss carryforw ards

40,819

-

-

40,819

364,810

(133,575)

(9,972)

221,263

As at June 30, 2020, the Company has tax loss carryforwards in the amount of R$3,339,156, in Company, and R$6,676,225 in Consolidated (R$3,115,535 and R$6,369,813 as at March 31, 2020, respectively) for which no deferred income tax and social contribution assets have been recognized.

12. LEASES

12.1 Asset use right in leases

This line item includes the amounts that correspond to the right to use the current agreements; the amount is equivalent to the present value of the obligations assumed with the counterparties. These agreements are payable on the respective maturity dates (between 1 and 13 years).

The changes for the period are broken down as follows:

Company

Agricultural

Equipment

Land

Buildings

Vehicles

partnerships

Total

03.31.20

121,329

134,947

1,533

2,488

440,009

700,306

Additions/adjustments

2,666

11,605

-

-

38,135

52,406

Derecognition

(3,568)

-

-

-

-

(3,568)

Amortization

(13,207)

(6,811)

(256)

(589)

(27,952)

(48,815)

06.30.20

107,220

139,741

1,277

1,899

450,192

700,329

Company

Agricultural

Equipment

Land

Buildings

Vehicles

partnerships

Total

03.31.19

Initial adoption on April 1, 2019

142,669

112,768

2,554

4,845

393,697

656,533

Additions/adjustments

55,367

50,499

-

-

143,509

249,375

Derecognition

(19,991)

-

-

-

-

(19,991)

Amortization

(56,716)

(28,320)

(1,021)

(2,357)

(97,197)

(185,611)

03.31.20

121,329

134,947

1,533

2,488

440,009

700,306

21

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

Agricultural

Equipment

Land

Buildings

Vehicles

partnerships

Total

03.31.20

254,249

137,257

1,533

5,174

1,179,166

1,577,379

Additions/adjustments

21,084

11,664

-

-

103,391

136,139

Derecognition

(7,468)

-

-

-

-

(7,468)

Amortization

(28,178)

(7,178)

(256)

(1,225)

(80,651)

(117,488)

06.30.20

239,687

141,743

1,277

3,949

1,201,906

1,588,562

Consolidated

Agricultural

Equipment

Land

Buildings

Vehicles

partnerships

Total

03.31.19

Initial adoption on April 1, 2019

296,896

115,195

2,554

10,075

1,068,666

1,493,386

Additions/adjustments

118,960

51,556

-

-

425,349

595,865

Derecognition

(34,675)

-

-

-

-

(34,675)

Amortization

(126,932)

(29,494)

(1,021)

(4,901)

(314,849)

(477,197)

03.31.20

254,249

137,257

1,533

5,174

1,179,166

1,577,379

12.2 Lease liabilities

Lease liabilities refer to future payments stated to present value at the discount rate, subject to possible effects from recoverable taxes (PIS and COFINS).

The incremental interest rate of the lease liability varies between 6.36% and 11.25% per year.

The changes for the period are broken down as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Present value of liability

732,385

732,114

1,693,183

1,681,269

732,385

732,114

1,693,183

1,681,269

Classification:

Current

200,569

215,257

477,464

498,932

Non-current

531,816

516,857

1,215,719

1,182,337

Total

732,385

732,114

1,693,183

1,681,269

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Opening balance

732,114

656,533

1,681,269

1,493,386

Additions

52,487

249,605

136,170

596,011

Derecognition

-

(4,065)

-

(6,065)

Payments

(66,348)

(221,208)

(155,783)

(521,309)

Financial charges

14,132

51,249

31,527

119,246

Closing balance

732,385

732,114

1,693,183

1,681,269

22

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The future payments are broken down as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Up to 1 year

200,569

215,257

477,464

498,932

Up to 2 years

157,929

161,243

367,714

365,273

Up to 3 years

111,791

109,793

269,040

260,574

Up to 4 years

89,650

87,311

216,082

210,009

Up to 5 years

95,423

86,462

214,338

193,298

Above 5 years

77,023

72,048

148,545

153,183

732,385

732,114

1,693,183

1,681,269

13. INVESTMENTS (PROVISION FOR INVESTMENT LOSS)

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Investments in subsidiaries and jointly-controlled subsidiaries

1,262,450

1,237,960

154,955

157,891

Other investments

2,502

2,502

2,502

2,502

Investments

1,264,952

1,240,462

157,457

160,393

Provision for investment loss

(1,467,473)

(1,251,234)

-

-

a) Interest in subsidiaries and jointly-controlled entities

Company

Consolidated

Biosev

Biosev Bioenergia

Biosev

Bioenergia S.A.

International S.A.

Comercializadora S.A.

TEAG

Capital

2,985,044

175

14,365

44,701

Profit (loss) for the period

(198,768)

30,430

(5,939)

(1,671)

Equity

(1,466,362)

356,444

561

36,939

Elimination of gains on the sale of property, plant and equipment w ith related parties

(1,111)

-

-

-

Shareholding interest

100%

100%

100%

50%

Value of investments in subsidiaries under equity method

(1,467,473)

356,444

561

18,470

Goodw ill/realization of concession value, net

494,079

-

-

136,485

Elimination of gains on the sale of property, plant and equipment w ith related parties

-

-

-

-

Investments

(973,394)

356,444

561

154,955

Provision for investment loss

(1,467,473)

-

-

-

Equity pick up in subsidiaries

(198,768)

30,430

(5,939)

(835)

b) Changes in investments in subsidiaries, jointly-controlled entities and non-controlled entities

Company

Goodw ill

Biosev

Biosev

Bioenergia

Biosev

Tavares de

Bioenergia S.A.

International S.A.

Comercializadora S.A.

Melo (*)

Ampla (*)

Other

06.30.20

03.31.20

Opening balance

(1.251.233)

326.014

6.500

-

-

2.502

(916.217)

(85.938)

Capital increase

-

-

-

-

-

-

-

4.000

Equity pick up in subsidiaries

(198.768)

30.430

(5.939)

-

-

-

(174.277)

(1.109.447)

Other comprehensive income

(17.472)

-

-

-

-

-

(17.472)

274.249

Other

-

-

-

-

-

-

-

919

Value of investments in subsidiaries under equity method

(1.467.473)

356.444

561

-

-

2.502

(1.107.966)

(916.217)

Goodw ill

494.079

-

-

407.675

3.691

-

905.445

905.445

Value of investments

494.079

356.444

561

407.675

3.691

2.502

1.264.952

1.240.461

Provision for investment loss

(1.467.473)

-

-

-

-

-

(1.467.473)

(1.251.233)

(*) Companies merged in prior years.

23

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

TEAG

Other

06.30.20

03.31.20

Opening balance

157,891

2,502

160,393

169,913

Equity pick up in subsidiaries

(2,936)

-

(2,936)

(8,952)

Profit (loss)

(835)

-

(835)

(553)

Realization of concession value, net

(2,101)

-

(2,101)

(8,399)

Other comprehensive loss

-

-

-

-

Value of investments

154,955

2,502

157,457

160,393

c) Investments in jointly-controlled entities

The balances of the balance sheet and statement of operations of the company are broken down as follows:

TEAG

06.30.20

03.31.20

Balance sheet

Assets

Total current assets

44,122

47,820

Long-term receivables

3,525

3,032

Property, plant and equipment and intangible assets

123,710

124,014

Total non-current assets

127,235

127,046

Total assets

171,357

174,866

Liabilities

Total current liabilities

17,370

18,286

Total non-current liabilities

117,048

117,970

Equity

Total equity

36,939

38,610

Total liabilities and equity

171,357

174,866

TEAG

06.30.20

03.31.20

Statement of operations

Net revenue

13,433

52,971

Operating expenses

General, administrative and selling expenses

(14,796)

(51,652)

Other operating income

103

4,541

Operating income (loss) before finance income (costs)

(1,261)

5,860

Finance income (costs), net

(1,294)

(7,529)

Loss before taxation

(2,555)

(1,669)

Income tax and social contribution

884

563

Loss for the period

(1,671)

(1,106)

24

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

14. PROPERTY, PLANT AND EQUIPMENT

Company

06.30.20

03.31.20

Accumulated

Accumulated

Cost

depreciation

Net

Cost

depreciation

Net

Land

15,095

-

15,095

15,095

-

15,095

Buildings

260,119

(93,531)

166,588

259,775

(92,431)

167,344

Improvements

25,588

(13,714)

11,874

25,587

(13,501)

12,086

Facilities

354,151

(211,251)

142,900

351,848

(208,192)

143,656

Furniture and fixtures

12,259

(8,334)

3,925

12,186

(8,193)

3,993

IT equipment

30,951

(28,930)

2,021

30,927

(28,672)

2,255

Machinery and equipment (*)

2,256,539

(1,451,286)

805,253

2,246,767

(1,388,282)

858,485

Vehicles

10,586

(8,669)

1,917

10,615

(8,567)

2,048

Agricultural machinery and implements (**)

962,828

(850,387)

112,441

960,728

(805,016)

155,712

Bearer plant

1,677,662

(1,410,218)

267,444

1,627,300

(1,366,804)

260,496

5,605,778

(4,076,320)

1,529,458

5,540,828

(3,919,658)

1,621,170

Construction in progress (Note 14.1)

12,723

-

12,723

14,263

-

14,263

5,618,501

(4,076,320)

1,542,181

5,555,091

(3,919,658)

1,635,433

Consolidated

06.30.20

03.31.20

Accumulated

Accumulated

Cost

depreciation

Net

Cost

depreciation

Net

Land

21,084

-

21,084

21,084

-

21,084

Buildings

477,944

(187,251)

290,693

475,559

(184,730)

290,829

Improvements

129,166

(61,142)

68,024

128,777

(60,118)

68,659

Facilities

555,011

(326,644)

228,367

545,312

(320,850)

224,462

Furniture and fixtures

20,940

(14,659)

6,281

20,731

(14,443)

6,288

IT equipment

61,358

(53,972)

7,386

60,607

(53,128)

7,479

Machinery and equipment (*)

5,646,155

(3,808,881)

1,837,274

5,595,046

(3,657,614)

1,937,432

Vehicles

35,177

(34,195)

982

35,459

(34,121)

1,338

Agricultural machinery and inputs (**)

1,736,989

(1,515,141)

221,848

1,734,333

(1,426,694)

307,639

Bearer plant

3,065,723

(2,505,707)

560,016

2,966,966

(2,427,778)

539,188

11,749,547

(8,507,592)

3,241,955

11,583,874

(8,179,476)

3,404,398

Construction in progress (Note 14.1)

24,750

-

24,750

72,993

-

72,993

11,774,297

(8,507,592)

3,266,705

11,656,867

(8,179,476)

3,477,391

  1. Includes deferred manufacturing costs. (**) Includes deferred agricultural costs.

25

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The changes in the net value of property, plant and equipment are as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Opening balance

1,635,433

1,697,433

3,477,391

3,641,525

Acquisitions and additions

55,671

378,970

110,768

793,991

Residual value of w rite-offs

(16)

(53,726)

(606)

(58,913)

Transfer to assets held for sale

7,028

19,312

7,028

22,818

losses (*)

-

706

9

522

Depreciation for the period/year

(155,935)

(407,262)

(327,885)

(922,552)

1,542,181

1,635,433

3,266,705

3,477,391

(*) See Note 14.3.

14.1 Construction in progress

Construction in progress is broken down by plant as follows:

The balance of construction in progress refers basically to the adaptation of industrial facilities, increase in sugar production and refurbishment of administrative facilities.

14.2 Fixed assets given in guarantee and commitments for acquisition of fixed assets

As at June 30, 2020, the Company had agreements with suppliers for acquisition of fixed assets, amounting to R$19,041 (R$21,607 as at March 31, 2020), and total fixed assets given in guarantee in the amount of R$1,102,876 (R$809,362 as at March 31, 2020).

14.3 Impairment

As at June 30, 2020, the reversal/impairment totaled R$9 in Consolidated (R$706, in Company, and R$522, in Consolidated, as at March 31, 2020), due the sales and/or transfers of fixed assets between industrial clusters of the Group.

As at June 30, 2020, the accumulated balance of impairment is R$61,491, in Company, and R$190,952 in Consolidated (R$61,491 and R$190,961 as at March 31, 2020, respectively).

The main impaired assets comprise land, buildings, furniture and fixtures, computers, machinery and equipment, vehicles, and agricultural machinery and implements.

15. INTANGIBLE ASSETS

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Goodw ill

Biosev Bioenergia

-

-

494,079

494,079

Usinas Tavares de Melo

-

-

407,675

407,675

Ampla

-

-

3,691

3,691

-

-

905,445

905,445

Softw are

Licenses

10,456

11,856

11,475

12,997

10,456

11,856

11,475

12,997

Other

-

-

3,218

3,522

-

-

3,218

3,522

10,456

11,856

920,138

921,964

26

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The changes in intangible assets are as follows:

Company

Reversal

03.31.20

Additions

Write-off

Amortization

Impairment

06.30.20

Softw are

Licences

11,856

189

(141)

(1,589)

141

10,456

11,856

189

(141)

(1,589)

141

10,456

Company

03.31.19

Additions

Amortization

06.30.19

Softw are

Licences

9,126

5,585

(1,463)

13,248

9,126

5,585

(1,463)

13,248

Consolidated

Reversal

03.31.20

Additions

Write-off

Amortization

Impairment

06.30.20

Goodw ill

Biosev Bioenergia

494,079

-

-

-

-

494,079

Usinas Tavares de Melo

407,675

-

-

-

-

407,675

Ampla

3,691

-

-

-

-

3,691

Softw are

Licences

12,997

190

(251)

(1,712)

251

11,475

Other

Other

3,522

-

-

(304)

-

3,218

921,964

190

(251)

(2,016)

251

920,138

Consolidated

03.31.19

Additions

Amortization

06.30.19

Goodw ill

Biosev Bioenergia

494,079

-

-

494,079

Usinas Tavares de Melo

407,675

-

-

407,675

Ampla

3,691

-

-

3,691

Softw are

Licences

9,726

6,475

(1,615)

14,586

Other

Other

4,489

-

(424)

4,065

919,660

6,475

(2,039)

924,096

27

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

16. BORROWINGS AND FINANCING

Company

Weighted average financial

Description

Advance on Foreign Exchange Contract (ACC)

(a)

Export Prepayment - PPE (a)

Constitutional Fund to Finance the the Midw est -

FCO

Finame

Export Credit Note and Bill - NCE

Offshore Loan (a)

Currency

charges

Maturity (*)

Collaterals

06.30.20

03.31.20

US$

Exchange rate change plus average

As at 03.31.23

Guarantee and promissory note

1,766,953

1,625,953

interest rate of 5.37% p.a.

US$

Exchange rate change plus Libor

As at 03.25.23

Promissory note, receivables and

725,973

680,727

plus average interest rate of 4% p.a.

collateral

R$

Interest of 10% p.a.

As at 12.01.23

Guarantee, conditional sale and

48,410

51,868

receivables

R$

Average interest rate of 9.38% p.a.

From 04.17.23 to

Conditional sale, guarantee and

33,947

38,370

and TLP + 4.92% p.a.

04.15.25

promissory note

R$

CDI plus average interest rate of 2%

As at 04.29.22

Guarantee, promissory note and collateral

181,082

181,212

Exchange rate change plus Libor

US$

plus average interest rate of 5.75%

As at 10.15.27

Mortgage, credit rights and collateral

275,789

285,479

p.a.

Bank Credit Note - CCB

R$

CDI plus average interest rate of 2% As at 03.30.23

Collection and assignment of receivables

Current liabilities

Non-current liabilities

Weighted average financial

Description

Currency

charges

Maturity (*)

Collaterals

Guarantee, receivables, mortgage and

Restructured debt (ex-Debentures) - R$

R$

CDI plus 1.72% p.a.

As at 07.10.24

shares

Exchange rate change plus Libor

Guarantee, receivables, mortgage and

Restructured debt - US$

US$

plus average interest rate of 2.47%

As at 07.10.23

shares

p.a.

Restructured debt (debenture) - R$ (a)

R$

CDI plus 1.72% p.a.

As at 07.10.24

Guarantee, receivables, mortgage and

shares

139,157 139,434

3,171,311 3,003,043

421,054 2,935,559

2,750,25767,484

Consolidated

06.30.20 03.31.20

100,925 99,771

789,201 741,176

142,420 140,590

Advance on Foreign Exchange Contract - ACC

US$

(a)

Export Prepayment - PPE (a)/(b)

US$

Constitutional Fund to Finance the Midw est - FCO

R$

Finame

R$

Export Credit Note and Bill - NCE

R$

Offshore Loan (a)

US$

Bank Credit Note - CCB

R$

Exchange rate change plus average

As at 03.31.23

Guarantee and promissory note

interest rate of 5.40% p.a.

Exchange rate change plus Libor

From 03.25.2023

Guarantee, promissory note,receivables

plus average interest rate of 5.64%

to 04.30.23

and collateral

p.a.

Interest of 10% p.a.

As at 12.01.23

Guarantee, conditional sale and

receivables

Average interest rate of 9.55% p.a.

From 04.15.21 to

Conditional sale, guarantee and

and TLP + 4.92% p.a.

04.15.25

promissory note

CDI plus average interest rate of 2.%

As at 04.29.22

Guarantee, promissory note and collateral

p.a.

Exchange rate change plus Libor

plus average interest rate of 5.75%

As at 10.15.27

Mortgage, credit rights and collateral

p.a.

CDI plus average interest rate of 2%

As at 03.30.23

Collection and assignment of receivables

p.a.

3,839,390 3,642,512

2,178,176 1,962,581

48,410 51,868

67,358 76,802

181,082 181,212

275,789 285,479

139,157 139,434

7,761,908 7,321,425

Current liabilities

Non-current liabilities

(*) Refers to the last maturity date of the agreements.

1,168,611 7,225,234

6,593,29796,191

  1. Net of commission costs and deferred expenses, in the amount of R$2,758, in Company, and R$8,934, in Consolidated, as at June 30, 2020 (R$2,755, in Company, and R$8,843, in Consolidated, as at March 31, 2020), monthly recorded in profit or loss through the maturity of such transaction.
  2. Include export prepayments, contracted on January 9, 2015, by subsidiary Biosev Bioenergia International S.A. with the trade union of foreign financial institutions, in the amount of R$1,210,605 as at June 30, 2020 (R$1,150,301 as at March 31, 2020). These operations are collateralized by a set of assets for settlement. As at June 30, 2020, the foreign currency- denominated deposits comprise, together with the agricultural production (sugarcane) of specific units and sugar and ethanol inventories, the ratio of 115.66% of the obligations.

28

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Non-current liabilities mature as follows (crop year):

Company

Consolidated

06.30.20

06.30.20

July 2021 to March 2022

1,019,395

2,673,689

April 2022 to March 2023

1,524,316

3,377,486

April 2023 to March 2024

53,062

378,721

April 2024 to March 2025

41,990

48,828

April 2025 to October 2027

111,494

114,573

2,750,257

6,593,297

The verification of compliance with the restrictive clauses occurs annually, on the balance sheet date. On March 31, 2020, the Company did not reach certain indicators established for financial covenants, however the Company obtained a waiver from its financial creditors for contracts subject to the compliance with such indicators, being exempted from complying with the financial covenants not reached, maintaining the original maturity dates.

16.1 Changes in borrowings and financing

Opening balance

Additions

Payment of principal

Interest, exchange rate changes and inflation adjustments and adjustment to fair value of loans, net

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

3,003,043

2,508,176

7,321,425

5,979,328

492,784

1,840,335

859,770

4,459,444

(475,322)

(1,961,531)

(785,958)

(4,733,209)

198,543

825,313

455,673

2,080,661

Payment of interest

(47,737)

(209,250)

(89,002)

(464,799)

Closing balance

3,171,311

3,003,043

7,761,908

7,321,425

17. TRADE PAYABLES

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Related parties (Note 20)

In Brazil

3,919

6,068

5,049

8,001

Abroad

98,382

89,808

5,169

4,494

102,301

95,876

10,218

12,495

Third parties

In Brazil

218,954

215,843

623,669

662,534

Abroad

176

3,118

61,138

129,839

219,130

218,961

684,807

792,373

321,431

314,837

695,025

804,868

Current liabilities

316,809

309,104

690,168

798,903

Non-current liabilities

4,622

5,733

4,857

5,965

29

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

18. TAXES PAYABLE

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Payment in installments

79

125

2,099

2,137

Tax on manufactured products (IPI)

-

-

569

1,027

State VAT (ICMS)

3,408

6,916

3,408

8,152

Taxes on revenue (PIS and COFINS)

601

314

1,583

4,979

Social Security Tax (INSS)

9,064

3,867

21,209

11,083

Income tax (IRPJ) and social contribution (CSLL)

598

3,378

32,798

40,299

Withholding Income Tax (IRPF)

12,660

12,660

12,660

12,660

Other

13,117

12,555

13,440

13,316

39,527

39,815

87,766

93,653

Current liabilities

21,203

21,314

69,442

75,152

Non-current liabilities

18,324

18,501

18,324

18,501

19. PROVISION FOR TAX, LABOR, CIVIL AND ENVIRONMENTAL CONTINGENCIES

The Company is a party to various ongoing lawsuits involving tax, labor, civil and environmental matters arising in the normal course of business.

Company

Inflation

Written-off

Written-off

03.31.20

adjustment

Additions

reversals

payments

06.30.20

Tax

Income tax (IRPJ) and social contribution (CSLL)

78

-

-

-

-

78

78

-

-

-

-

78

Labor

84,919

1,966

6,756

(2,909)

(1,413)

89,319

Environmental

1,696

(111)

326

(263)

-

1,648

Civil

20,783

374

290

(301)

-

21,146

Criminal

605

14

-

-

-

619

108,003

2,243

7,372

(3,473)

(1,413)

112,732

108,081

2,243

7,372

(3,473)

(1,413)

112,810

Company

Inflation

Written-off

Written-off

03.31.19

adjustment

Additions

reversals

payments

06.30.19

Tax

Income tax (IRPJ) and social contribution (CSLL)

76

1

-

-

-

77

76

1

-

-

-

77

Labor

128,197

(56)

11,148

(9,282)

(1,523)

128,484

Environmental

1,468

210

3

(73)

-

1,608

Civil

8,338

1,075

5,027

(516)

-

13,924

138,003

1,229

16,178

(9,871)

(1,523)

144,016

138,079

1,230

16,178

(9,871)

(1,523)

144,093

30

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

Inflation

Written-off

Written-off

03.31.20

adjustment

Additions

reversals

payments

06.30.20

Tax

IPI levied on sugar sales

17,785

33

-

-

-

17,818

PIS and COFINS

3,406

-

-

-

-

3,406

Income tax (IRPJ) and social contribution (CSLL)

2,852

-

-

-

-

2,852

Other

16

-

-

-

-

16

24,059

33

-

-

-

24,092

Labor

227,868

3,714

23,933

(2,145)

(13,616)

239,754

Environmental

11,354

1,011

877

(304)

-

12,938

Civil

30,782

93

524

(627)

-

30,772

Criminal

605

14

-

-

-

619

270,609

4,832

25,334

(3,076)

(13,616)

284,083

294,668

4,865

25,334

(3,076)

(13,616)

308,175

Consolidated

Inflation

Written-off

Written-off

03.31.19

adjustment

Additions

reversals

payments

06.30.19

Tax

IPI levied on sugar sales

17,584

57

-

-

-

17,641

PIS and COFINS

3,406

-

-

-

-

3,406

Income tax (IRPJ) and social contribution (CSLL)

2,850

1

-

-

-

2,851

Other

16

-

-

-

-

16

23,856

58

-

-

-

23,914

Labor

236,368

2,514

31,176

(14,686)

(5,484)

249,888

Environmental

7,611

385

3

(474)

-

7,525

Civil

19,402

1,695

5,943

(1,108)

-

25,932

263,381

4,594

37,122

(16,268)

(5,484)

283,345

287,237

4,652

37,122

(16,268)

(5,484)

307,259

Contingencies - court or out-of-court claims classified as possible losses and not accrued

Tax

The tax claims (court and out-of-court) as at June 30, 2020, with an acknowledged possible likelihood of loss and not accrued are shown in the table below:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Tax

754,719

725,832

1,691,450

1,652,707

754,719

725,832

1,691,450

1,652,707

Among the contingencies for which a provision has not been recognized and that have been assessed as possible loss is the collection of ICMS due to an alleged difference identified in inventories. Additionally, there is a discussion also involving ICMS on the reasonableness in levying ICMS on export of semi-finished products.

31

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Civil, environmental and labor

The civil, environmental and labor claims (court and out-of-court) as at June 30, 2020, with an acknowledged possible likelihood of loss and not accrued are shown in the table below:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Civil

107,919

101,979

154,668

147,405

Environmental

11,257

12,278

73,754

74,433

Labor

73,117

76,297

124,949

126,742

192,294

190,554

353,371

348,580

As at June 30, 2020, the Group was a party to labor, environmental and civil lawsuits whose likelihood of loss is considered possible based on the opinion of Group's legal counsel.

Labor claims are substantially related to (i) working hours; (ii) time in transit; (iii) additional premiums; (iv) refund of deductions, such as trade union fees; (v) contractual exclusivity; (vi) jointly-liability with service providers; (vii) occupational accidents and/or hazards/diseases; (viii) organizational climate; (ix) validity of the collective bargaining agreement, and (x) compensation costs in relation to the items mentioned above.

Civil lawsuits basically refer to discussions involving contractual issues and occupational and/or traffic accidents, collection, possession issues and general indemnities.

Environmental lawsuits are substantially related to: (i) burn of sugarcane straw; and (ii) alleged non-authorized intervention or damages in an area considered by environmental authorities as a permanent preservation area.

20. RELATED PARTIES

The information on related-party transactions has not significantly changed compared to the information disclosed in the financial statements as at March 31, 2020.

The related-party transactions described in the tables below refer basically to: (i) sales in the domestic and international markets at the price agreed between the parties, based on the market quotation; (ii) loan transactions; (iii) apportionment of costs relating to the shared facilities; (iv) provision of brokerage services involving derivative transactions; (v) commodities export performance operations; and (vi) lifting and sugar storage services.

The tables below show the balances and transactions as at June 30, 2020 between the Company and its subsidiaries, which are consolidated in its balance sheet:

Company

Assets

Subsidiaries

Trade receivables

Loan

Total

Biosev Bioenergia International S.A.

164,675

-

164,675

Biosev Bioenergia S.A.

10,399

-

10,399

Biosev Comercializadora S.A.

1,223

-

1,223

06.30.20

176,297

-

176,297

Biosev Bioenergia International S.A.

132,489

-

132,489

Biosev Bioenergia S.A.

4,164

26,736

30,900

Biosev Comercializadora S.A.

3,334

-

3,334

03.31.20

139,987

26,736

166,723

32

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Company

Liabilities

Subsidiaries

Advances from

Trade payables (*)

customers (**)

Loan (**)

Total

Biosev Bioenergia International S.A.

101,607

870,768

-

972,375

Biosev Bioenergia S.A.

2,554

-

939

3,493

Biosev Comercializadora S.A.

496

-

-

496

Sociedade Operadora Portuária de São Paulo S/A

-

-

14,196

14,196

06.30.20

104,657

870,768

15,135

990,560

Biosev Bioenergia International S.A.

95,932

814,736

-

910,668

Biosev Bioenergia S.A.

4,134

-

-

4,134

Sociedade Operadora Portuária de São Paulo S/A

-

-

14,108

14,108

03.31.20

100,066

814,736

14,108

928,910

  1. As at June 30, 2020, the amount of R$3,225 (R$3,062 as at March 31, 2020) was recorded in current liabilities, in line item "Other payables".
    (**) As at June 30, 2020, the amounts of R$25,457 (R$12,231 as at March 31, 2020) and R$845,311 (R$802,505 as at March 31, 2020) were recorded in current liabilities and non-current liabilities, respectively.

Company

Profit (loss)

Income

Expenses

Subsidiaries

Sales

Interest

Total

Purchases

Interest

Total

Biosev Bioenergia International S.A.

138,314

-

138,314

(546)

(68,621)

(69,167)

Biosev Bioenergia S.A.

22,619

-

22,619

(176)

(84)

(260)

Biosev Comercializadora S.A.

4,902

-

4,902

(1,516)

-

(1,516)

Sociedade Operadora Portuária de São Paulo S/A

-

-

-

-

(245)

(245)

06.30.20

165,835

-

165,835

(2,238)

(68,950)

(71,188)

Biosev Bioenergia International S.A.

20,174

10,425

30,599

-

(10,852)

(10,852)

Biosev Bioenergia S.A.

486

155

641

(817)

(5)

(822)

Biosev Comercializadora S.A.

6,021

61

6,082

-

-

-

Sociedade Operadora Portuária de São Paulo S/A

-

-

-

-

(195)

(195)

06.30.19

26,681

10,641

37,322

(817)

(11,052)

(11,869)

The tables below show the balances and transactions as at June 30, 2020 between the Company and other related parties:

Company

Assets

Trade

Advances to

Derivatives (*)

receivables

suppliers

Total

Companies under common control

Louis Dreyfus Company Suisse S.A.

-

16,227

-

16,227

Louis Dreyfus Company Brasil S.A.

-

509

921,351

921,860

Term Commodities Inc.

39,565

-

-

39,565

06.30.20

39,565

16,736

921,351

977,652

Companies under common control

Louis Dreyfus Company Suisse S.A.

-

1,014

-

1,014

Louis Dreyfus Company Brasil S.A.

-

-

885,170

885,170

Term Commodities Inc.

19,112

-

-

19,112

03.31.20

19,112

1,014

885,170

905,296

33

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

Assets

Trade

Advances to

Derivatives (*)

receivables

suppliers

Total

Companies under common control

Louis Dreyfus Company Ethanol Merchandising LLC

-

95

-

95

Louis Dreyfus Company Brasil S.A.

-

533

1.743.998

1.744.531

Louis Dreyfus Company Suisse S.A.

-

218.957

-

218.957

Louis Dreyfus Commodities Agroindustrial S.A.

-

24

-

24

Term Commodities Inc.

39.565

115

-

39.680

06.30.20

39.565

219.724

1.743.998

2.003.287

Companies under common control

Louis Dreyfus Company Ethanol Merchandising LLC

-

91

-

91

Louis Dreyfus Company Brasil S.A.

-

-

2.506.685

2.506.685

Louis Dreyfus Company Suisse S.A.

-

2.153

-

2.153

Term Commodities Inc.

19.112

261

-

19.373

03.31.20

19.112

2.505

2.506.685

2.528.302

  1. As at June 30, 2020, the amount of R$37,203 (R$19,112 as at March 31, 2020) was recorded in line item "Short-term investments", relating to margin deposits in derivative transactions.

Company

Liabilities

Trade

Advances from

Derivatives

payables

customers

Total

Companies under common control

Louis Dreyfus Company Brasil S.A.

-

281

-

281

Louis Dreyfus Company Suisse S.A.

-

-

914,492

914,492

-

281

914,492

914,773

Jointly-controlled entity

TEAG - Terminal Exp. Açúcar Guarujá Ltda.

-

588

-

588

06.30.20

-

869

914,492

915,361

Companies under common control

Louis Dreyfus Company Brasil S.A.

-

185

-

185

Louis Dreyfus Company Suisse S.A.

-

-

878,580

878,580

Term Commodities Inc.

6,585

-

-

6,585

6,585

185

878,580

885,350

Jointly-controlled entity

TEAG - Terminal Exp. Açúcar Guarujá Ltda.

-

1,749

-

1,749

-

1,749

-

1,749

03.31.20

6,585

1,934

878,580

887,099

34

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

Liabilities

Trade

Advances from

Derivatives

payables

customers

Total

Companies under common control

Louis Dreyfus Company Brasil S.A.

-

406

-

406

Louis Dreyfus Company Suisse S.A.

1,862

4,657

1,732,798

1,739,317

LDC Trading and Services Co. S.A.

-

512

-

512

1,862

5,575

1,732,798

1,740,235

Jointly-controlled entity

TEAG - Terminal Exp. Açúcar Guarujá Ltda.

-

4,643

-

4,643

-

4,643

-

4,643

06.30.20

1,862

10,218

1,732,798

1,744,878

Companies under common control

Louis Dreyfus Company Brasil S.A.

-

309

-

309

Louis Dreyfus Company Suisse S.A.

289

4,251

2,486,605

2,491,145

LDC Trading and Services Co. S.A.

-

243

-

243

Term Commodities Inc.

6,585

-

-

6,585

6,874

4,803

2,486,605

2,498,282

Jointly-controlled entity

TEAG - Terminal Exp. Açúcar Guarujá Ltda.

-

7,692

-

7,692

-

7,692

-

7,692

03.31.20

6,874

12,495

2,486,605

2,505,974

Company

Profit (loss)

Income

Expenses

Interest and

Interest and

exchange rate

exchange rate

Total

Sales

changes

Total income

Sales

changes

expenses

Companies under common control

Louis Dreyfus Company Brasil S.A.

-

-

-

(243,066)

-

(243,066)

Louis Dreyfus Company Suisse S.A.

270,610

-

270,610

-

-

-

Macrofértil Indústria e Comércio de Fertilizantes Ltda.

-

-

-

(105)

-

(105)

Term Commodities Inc.

-

-

-

(3,871)

-

(3,871)

270,610

-

270,610

(247,042)

-

(247,042)

Jointly-controlled entity

Teag-Terminal Exp. Açúcar Guarujá Ltda.

-

-

-

(237)

-

(237)

-

-

-

(237)

-

(237)

06.30.20

270,610

-

270,610

(247,279)

-

(247,279)

Companies under common control

Louis Dreyfus Company Brasil S.A.

-

5,144

5,144

(534,596)

-

(534,596)

Louis Dreyfus Company Suisse S.A.

529,760

-

529,760

-

(4,984)

(4,984)

Term Commodities Inc.

-

-

-

(1,476)

-

(1,476)

529,760

5,144

534,904

(536,072)

(4,984)

(541,056)

Jointly-controlled entity

Teag-Terminal Exp. Açúcar Guarujá Ltda.

877

-

877

(1,076)

-

(1,076)

877

-

877

(1,076)

-

(1,076)

06.30.19

530,637

5,144

535,781

(537,148)

(4,984)

(542,132)

35

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

Profit (loss)

Income

Expenses

Interest and

Interest and

exchange rate

exchange rate

Total

Sales

changes

Total income

Sales

changes

expenses

Companies under common control

LDC Trading and Services Co.S.A.

-

-

-

(370)

(26)

(396)

Louis Dreyfus Company Brasil S.A.

17

-

17

(1,094,483)

-

(1,094,483)

Louis Dreyfus Company Suisse S.A.

1,548,182

10,207

1,558,389

(78,112)

-

(78,112)

Macrofértil Indústria e Comércio de Fertilizantes Ltda.

-

-

-

(185)

-

(185)

Term Commodities Inc.

-

71

71

(4,088)

-

(4,088)

1,548,199

10,278

1,558,477

(1,177,238)

(26)

(1,177,264)

Jointly-controlled entity

Teag-Terminal Exp. Açúcar Guarujá Ltda.

-

-

-

(3,340)

-

(3,340)

-

-

-

(3,340)

-

(3,340)

06.30.20

1,548,199

10,278

1,558,477

(1,180,578)

(26)

(1,180,604)

Companies under common control

LDC Trading and Services Co.S.A.

-

3

3

(274)

-

(274)

Louis Dreyfus Company Brasil S.A.

-

21,546

21,546

(628,332)

-

(628,332)

Louis Dreyfus Company Suisse S.A.

837,013

-

837,013

(1,837)

(22,002)

(23,839)

LDC Ethanol Interior Merchandising

-

1

1

-

-

-

Macrofértil Indústria e Comércio de Fertilizantes Ltda.

-

-

-

(674)

-

(674)

Term Commodities Inc.

-

-

-

(1,597)

(4)

(1,601)

837,013

21,550

858,563

(632,714)

(22,006)

(654,720)

Jointly-controlled entity

Teag-Terminal Exp. Açúcar Guarujá Ltda.

1,941

-

1,941

(1,324)

(1)

(1,325)

1,941

-

1,941

(1,324)

(1)

(1,325)

06.30.19

838,954

21,550

860,504

(634,038)

(22,007)

(656,045)

a) Compensation of key management personnel

The compensation of officers and other key management personnel for the period is as follows:

Company and Consolidated

06.30.20

06.30.19

Short-term benefits

6,640

6,453

Long-term benefits

2,302

1,458

8,942

7,911

The short-term benefits of key management personnel comprise salaries, social security contributions, pension fund contributions, social charges, profit sharing and short-term performance bonus. Long-term benefits include performance bonus and deferred benefits that expired in each financial statements.

21. EQUITY

Capital

The changes in capital are as follows:

Shares

In thousands of Brazilian reais - R$

Common

Capital

Capital reserve

03.31.20

1.020.429.426

6.077.674

1.353.937

06.30.20

1.020.429.426

6.077.674

1.353.937

36

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

22. NET REVENUE AND COST OF SALES AND SERVICES

Company

Three-month period ended

06.30.20 06.30.19

Consolidated

Three-month period

ended

06.30.20 06.30.19

Gross revenue

Domestic market

Sugar

47,709

16,463

60,846

39,582

Ethanol

115,901

425,102

246,356

715,750

Energy

54,008

52,992

130,770

122,160

Other

393

938

12,502

5,616

218,011

495,495

450,474

883,108

Foreign market

Sugar

213,054

34,489

648,238

252,806

Ethanol

13,850

-

232,886

86,229

Other (a)

515,200

529,759

1,397,168

623,540

742,104

564,248

2,278,292

962,575

960,115

1,059,743

2,728,766

1,845,683

Taxes (b)

(23,054)

(57,407)

(57,853)

(126,516)

Sales rebates

(1,231)

(300)

(1,287)

(803)

Net revenue

935,830

1,002,036

2,669,626

1,718,364

Cost of sales and services (c)

Domestic market

Sugar

(37,433)

(19,238)

(48,857)

(30,361)

Ethanol

(113,951)

(309,481)

(234,845)

(526,742)

Energy

(10,666)

(13,447)

(71,274)

(74,523)

Other

(1,791)

(1,335)

(18,260)

(7,888)

(163,841)

(343,501)

(373,236)

(639,514)

Foreign market

Sugar (d)

(139,286)

(31,088)

(524,619)

(224,373)

Ethanol (d)

(11,475)

-

(168,698)

(88,789)

Other (a)

(538,475)

(534,610)

(1,405,730)

(628,349)

(689,236)

(565,698)

(2,099,047)

(941,511)

Gains on changes in fair value less estimated costs to sell

biological assets

Sugar

103,553

10,002

123,906

19,842

Ethanol

73,496

61,506

89,923

73,555

177,049

71,508

213,829

93,397

(676,028)

(837,691)

(2,258,454)

(1,487,628)

  1. Amounts relating to the export of commodities.
  2. Include government grants, which reduced the taxable base on sales by R$13,006, in Company, in the period ended June 30, 2020 (R$26,834 as at June 30, 2019).
  3. Include PIS and COFINS credits in the amount of R$2,171, in Company, and R$4,503, in Consolidated, in the period ended June 30, 2020 (R$4,471 and R$8,199, as at June 30, 2019, respectively), as prescribed by article 3, of Law 10637/02, which addresses the non-cumulativeness of PIS/PASEP; and article 3, of Law 10833/03, which addresses the non- cumulativeness of COFINS.
  4. Include REINTEGRA credits, in the amount of R$121, in Company, and R$453, in Consolidated, in the period ended June 30, 2020 (R$2,319 and R$2,501, as at June 30, 2019, respectively), as set forth in article 21, of Law 13043, of November 13, 2014, which addresses the REINTEGRA reintroducing.

37

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

23. EXPENSES BY NATURE

The information on the nature of cost of sales and services and general, administrative and selling expenses is as follows:

Company

Consolidated

Three-month period

Three-month period

ended

ended

06.30.20

06.30.19

06.30.20

06.30.19

Cost of sales and services

Personnel (*)

(49,163)

(64,654)

(117,709)

(114,618)

Depreciation and amortization (**)

(218,131)

(233,363)

(448,243)

(430,344)

Raw materials and inputs, net of taxes:

Raw materials

(29,701)

(54,642)

(231,425)

(230,988)

Inputs and services

(13,941)

(4,793)

(45,893)

(31,659)

Products for resale

(542,141)

(551,747)

(1,629,013)

(773,416)

(585,783)

(611,182)

(1,906,331)

(1,036,063)

Gains on changes in fair value less estimated costs to sell biological

assets

177,049

71,508

213,829

93,397

(676,028)

(837,691)

(2,258,454)

(1,487,628)

General, administrative and selling expenses

Personnel (*)

(6,117)

(25,701)

(32,068)

(42,999)

Depreciation

(2,834)

(2,729)

(5,506)

(5,811)

Freight

(15,773)

(5,973)

(54,808)

(26,911)

Services

(12,387)

(11,734)

(31,496)

(19,523)

Shipping expenses

(859)

(259)

(22,919)

(5,392)

Other

(4,530)

(6,241)

(7,870)

(8,601)

(42,500)

(52,637)

(154,667)

(109,237)

  1. As at June 30, 2020, the personnel expenses, in Company and Consolidated, comprise R$53,592 and R$145,899, respectively (R$88,229 and R$153,445 as at June 30, 2019), and R$1,688 and R$3,878 (R$2,126 and R$4,172 as at June 30, 2019) relating to INSS contribution, respectively.

(**) Includes biological asset and agricultural produce.

38

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

24. FINANCE INCOME (EXPENSES)

Company

Consolidated

Three-month period

Three-month period

ended

ended

Finance income

06.30.20

06.30.19

06.30.20

06.30.19

Discounts obtained

442

24

802

169

Revenue from fixed income short-term investments

814

2,641

1,786

5,553

Interest

3,887

3,660

5,424

5,327

Other

39

843

500

1,918

5,182

7,168

8,512

12,967

Finance costs

Interest

(81,770)

(73,785)

(156,936)

(145,925)

Discounts granted

-

(37)

(7)

(37)

Tax on Financial Transactions (IOF)

(833)

(506)

(1,368)

(1,481)

Tax on Financial Transactions (IOF) - loan

-

(7)

(173)

(1,109)

Other

(582)

(133)

(1,387)

(402)

Taxes on revenue (PIS and COFINS) on finance income

(197)

(321)

(350)

(577)

(83,382)

(74,789)

(160,221)

(149,531)

Derivatives

Commodities derivatives - Commercial transactions

(43,180)

51,983

5,022

19,715

Commodities derivatives - Financial transactions

46,160

(10,740)

46,160

(10,740)

Interest rate derivatives - Libor sw ap

-

-

(1,806)

304

2,980

41,243

49,376

9,279

Exchange rate changes

(171,329)

40,866

(383,428)

76,284

Finance costs

(246,549)

14,488

(485,761)

(51,001)

25. OTHER OPERATING INCOME (EXPENSES)

Company

Three-month period ended

06.30.20 06.30.19

Consolidated

Three-month period ended

06.30.20 06.30.19

Recognition of provision for tax, labor, civil and environmental contingencies

(2,486)

(4,784)

(8,642)

(15,370)

Contratual fines and indemnities

(4,279)

(8,091)

(15,381)

(16,636)

Tax expenses

(1,122)

(2,075)

(3,268)

(1,566)

Reversal of Impairment of fixed assets

141

376

260

1,704

Gains (losses) on sale of property, plant and equipment

85

504

864

5,428

Impairment of assets held for sale

119

(21,060)

119

(21,114)

Reversal (recognition) of estimated losses on doubtful accounts

(7)

(389)

231

(590)

Provision for other losses

(27)

(122)

(3,762)

(58,740)

Other operating expenses, net

1,014

966

1,561

1,759

Total other operating income (expenses), net

(6,562)

(34,675)

(28,018)

(105,125)

Total other operating income

6,348

3,497

8,414

8,409

Total other operating expenses

(12,910)

(38,172)

(36,432)

(113,534)

39

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

26. LOSS PER SHARE

The basic and diluted loss per share was calculated based on the loss attributable to the Biosev's owners divided by the weighted average number of outstanding common shares in the period.

Loss for the year attributable to the Company's ow ners

Weighted average number of shares used to calculate basic and diluted earnings per share

Total basic and diluted loss per share

Company

Consolidated

Three-month period

Three-month period

ended

ended

06.30.20

06.30.19

06.30.20

06.30.19

(281,213)

(168,821)

(281,213)

(168,821)

474,006,366

386,367,962

474,006,366

386,367,962

(0.59327)

(0.43694)

(0.59327)

(0.43694)

27. RISK MANAGEMENT AND FINANCIAL INSTRUMENTS I - Risk management

The Company is exposed to risks arising from its operations and considers market, credit, liquidity, and capital risks as the most significant risks to which it is exposed.

The objective of the Company's risk management program is to hedge its results against fluctuations in sugar, ethanol and electric power prices, foreign exchange and interest rates. These risks are managed using hedging financial instruments available in the financial market, such as: swaps and interest rate futures; currency forwards, futures and options; and commodity forwards, swaps, futures and options. Transactions carried out in the over-the-counter market are contracted through low-risk domestic and foreign banks. Transactions contracted on the stock exchange market are mainly traded in futures and options markets at the New York Commodities Exchange (NYSE: ICE), Chicago Commodities Exchange (NYSE: CME) and Brasil Bolsa Balcão (B3).

The use of these instruments is guided by the Financial and Risk Management Policy approved and reviewed by the Board of Directors on January 13, 2020. Additionally, the Company does not carry out transactions with any type of leverage, as well as does not have transactions with exotic derivatives.

The risk management policies, practices and instruments are oversight by the Executive Committee and the Strategic Committee (the body that supports the Company's Board of Directors).

The Executive Committee has the following responsibilities before the Board of Directors: (i) monitor the compliance with the policy and report eventual non-compliances; (ii) inform about the indebtness of the Company and its subsidiaries, as well as the related debt instruments; (iii) inform about the burdens on the assets of the Company and its subsidiaries; and (iv) monitor the risk management instruments of the Company and its subsidiaries.

The Risk Management Department is subject to the Chief Financial Officer and is responsible for the calculation, measurement, analysis and monitoring of the exposure, by issuing daily reports based on which the necessary corrective measures are taken. It is also responsible for monitoring the compliance with the risk management policies.

27.1 Market risk

The Company is mainly exposed to risks related to foreign exchange, interest rate and agricultural commodity price fluctuations. In order to hedge against these market risks, the Company uses various derivative financial instruments, including:

  • Foreign exchange forwards, options and futures to hedge fair value and cash flow items against exchange rate changes;
  • Interest rate futures to supplement the hedging of such items;
  • Interest rate swaps to mitigate LIBOR fluctuation risk;

40

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

  • Commodity forwards, swaps, futures and options to hedge inventory and future agricultural commodity delivery transactions.

The parameters used to manage these risks are based on hedging strategy monitoring tools, such as sensitivity analysis, stress tests, and a hedging scale, aimed at securing the future amount of sugar and ethanol sales, including the effects from foreign exchange rate, as well as interest rate exposure.

As at June 30, 2020, the assets and liabilities relating to the derivative transactions are broken down as follows:

Company

Consolidated

06.30.20

03.31.20

06.30.20

03.31.20

Exchange risk management (Note 27.1.1)

(240.920)

(343.960)

(240.920)

(343.959)

Interest rate risk management (Note 27.1.2)

-

-

(30.702)

(27.963)

Agricultural commodity risk management (Note 27.1.3)

(4.204)

(5.441)

(1.945)

50.155

(245.124) (349.401) (273.567) (321.767)

Current assets

93.131

225.787

97.252

225.787

Non-current assets

-

-

-

55.885

Current liabilities

(338.255)

(575.188)

(353.256) (586.843)

Non-current liabilities

-

-

(17.563)

(16.596)

27.1.1 Foreign exchange risk management

Because the Company's functional currency is the Brazilian real (R$), the foreign currency-denominated operations are exposed to the foreign exchange risk. Foreign exchange positions are managed based on the Financial and Risk Management Policy, approved by the Company's Board of Directors on January 13, 2020. The Company carries out transactions with currency derivatives in order to reduce variability in its profit or loss due to the existence of US dollar denominated net cash flows from exports, costs and debts.

The Company may also contract derivative financial instruments to hedge its foreign exchange exposure that may impact assets and liabilities, as set forth in the policy.

The Company carries out transactions with interest rate derivatives traded on the B3 (one-day DI futures) in order to supplement foreign exchange rate hedges contracted under foreign exchange contracts traded on said exchange - future dollar financial instruments (DOL) and exchange coupon futures (DDI)). The consolidated use of such future contracts aims at having effects similar to those of one single DOL futures contract. This strategy is adopted by the Company without leverage. This is necessary because an individually traded DOL future contract does not have significant liquidity for terms above three months and, therefore, could not meet the Company's foreign exchange hedging requirements.

This practice is regulated by the B3 and has been widely disseminated among future market participants in Brazil for over a decade.

41

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The table below shows the Company's NDF, DOL, DI and DDI forward currency sale instruments, used for purposes of hedging foreign exchange risk and respective results:

Company and Consolidated

Notional value

Average exchange

rate

Foreign currency

Domestic currency (*)

Fair value

06.30.20

03.31.20

06.30.20

03.31.20

06.30.20

03.31.20

06.30.20

03.31.20

(Sale) purchase

(Sale) purchase

Outstanding forw ard contracts - NDF US Dollar

Hedge Accounting - Cash Flow

Sale

4,8604

4,2685

(315.213)

(380.500)

(1.532.064)

(1.624.177)

(187.770)

(359.644)

(315.213)

(380.500)

(1.532.064)

(1.624.177)

(187.770)

(359.644)

Non- Hedge Acccounting

Sale

4,5161

4,6227

(144.787)

(314.500)

(653.866)

(1.453.833)

(137.903)

(190.392)

Purchase

5,2530

4,7351

405.500

425.000

2.130.078

2.012.401

84.813

205.822

260.713

110.500

1.476.212

558.568

(53.090)

15.430

Futures B3 - Non-hedge Accounting

DOL - dollar futures

5,4760

5,1987

48.750

54.750

266.955

284.629

(1.981)

1.443

DDI - future exchange coupon

(58.304)

(85.160)

(319.272)

(442.721)

1.817

(1.511)

DI - 1 day:

42.955

70.725

235.222

367.677

103

322

33.401

40.315

182.905

209.585

(60)

254

(240.920)

(343.960)

(*) Convenience conversion.

27.1.2 Interest rate risk management

The Company uses Libor derivatives to hedge against interest rate fluctuations. These derivatives are traded on the Brazilian over-the-counter market with low-risk banks as counterparties, and are registered with CETIP S.A. - Balcão Organizado de Ativos e Derivativos (Brazilian organized OTC market), as required by prevailing legislation.

The table below shows the Company's Libor swap instruments with receipt of Libor interest and payment of fixed rates and presents the derivatives used for purposes of hedging Libor interest risk and respective results:

Consolidated

Notional value

Fixed average rate -

%

Foreign currency

Domestic currency (*)

Fair value

06.30.20

03.31.20

06.30.20

03.31.20

06.30.20

03.31.20

06.30.20

03.31.20

Hedge Accounting

Outstanding position:

Less than 1 year

3.15%

3.15%

39,967

39,967

218,857

207,775

(13,139)

(11,367)

1 to 2 years

3.15%

3.15%

39,967

39,967

218,857

207,775

(10,870)

(10,659)

2 to 5 years

3.15%

3.15%

56,002

56,002

306,665

291,136

(6,693)

(5,937)

135,936

135,936

744,379

706,686

(30,702)

(27,963)

(*) Convenience conversion.

42

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

27.1.3 Agricultural commodity risk management

The Company carries out transactions with commodity derivatives (sugar and ethanol) in order to reduce the impact of the changes in the market prices considering that these changes may significantly affect the Company's future sales value. These risks are managed according to the Company's Financial and Risk Management Policy and the hedge strategy monitoring tool which determines the hedge volume and timeframe.

The Company's swaps, forwards, futures and options in the period used for commodity risk hedging and the related results are as follows:

Company

Notional value

Foreign currency

Domestic currency (*)

Fair value

06.30.20

03.31.20

06.30.20

03.31.20

06.30.20

03.31.20

Sugar futures - ICE

Hedge Accounting - Cash Flow

(112,033)

(138,660)

(613,492)

(720,852)

2,687

(2,026)

Hedge Accounting - Fair Value

132,652

132,652

726,403

689,618

(5,571)

1,600

Non- Hedge Acccounting

56,105

(5,365)

307,229

(27,889)

5,245

(6,159)

76,724

(11,373)

420,140

(59,123)

2,361

(6,585)

Sugar options - ICE

Non- Hedge Acccounting

-

2,359

-

12,264

-

606

-

2,359

-

12,264

-

606

Sugar options - OTC

Non- Hedge Acccounting

(9,325)

(10,545)

(51,062)

(54,820)

(6,565)

(836)

(9,325)

(10,545)

(51,062)

(54,820)

(6,565)

(836)

NDF sugar - OTC

Non- Hedge Acccounting

-

(9,822)

-

(51,062)

-

1,156

-

(9,822)

-

(51,062)

-

1,156

Ethanol futures - B3

Non- Hedge Acccounting

Sugar futures - ICE

-

(425)

-

(2,211)

-

218

-

(425)

-

(2,211)

-

218

(4,204)

(5,441)

Consolidated

Notional value

Foreign currency

Domestic currency (*)

Fair value

06.30.20

03.31.20

06.30.20

03.31.20

06.30.20

03.31.20

Hedge Accounting - Cash Flow

(112,033)

(138,660)

(613,492)

(720,852)

2,687

(2,026)

Hedge Accounting - Fair Value

132,652

132,652

726,403

689,618

(5,571)

1,600

Non- Hedge Acccounting

56,105

(5,365)

307,229

(27,889)

5,245

(6,159)

76,724

(11,373)

420,140

(59,123)

2,361

(6,585)

Sugar Sales Agreements

Hedge Accounting - Fair Value

(132,652)

(132,652)

(726,403)

(689,618)

4,121

55,885

(132,652)

(132,652)

(726,403)

(689,618)

4,121

55,885

Sugar options - ICE

Non- Hedge Acccounting

-

2,359

-

12,264

-

606

-

2,359

-

12,264

-

606

Sugar options - OTC

Non- Hedge Acccounting

(3,313)

(14,035)

(18,144)

(72,964)

(1,862)

(1,125)

(3,313)

(14,035)

(18,144)

(72,964)

(1,862)

(1,125)

NDF sugar - OTC

Non- Hedge Acccounting

(9,325)

(9,822)

(51,062)

(51,062)

(6,565)

1,156

(9,325)

(9,822)

(51,062)

(51,062)

(6,565)

1,156

Ethanol futures - B3

Non- Hedge Acccounting

-

(425)

-

(2,211)

-

218

-

(425)

-

(2,211)

-

218

(1,945)

50,155

(*) Convenience conversion.

43

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

27.2 Credit risk

The credit risk is managed through the careful analysis of the customer portfolio, the definition of credit limits, and the ongoing control of outstanding positions. In conformity with the Company's credit policy, using a risk assessment methodology, the Company adopted balanced scorecard techniques. The Company adopts hedging instruments, such as collaterals, pledges and guarantees, to mitigate potential credit exposures. Historically, the Company does not record significant losses in trade receivables.

27.3 Liquidity risk

The Company operates with a liquidity level considered sufficient for its operations and uses a number of sources of funds to finance its activities. In order to cover possible liquidity deficiencies or mismatches between cash and cash equivalents with short-term maturities, the Company has good relationship with first-class banks, in Brazil or abroad, as well as a credit line with its parent. Moreover, the products manufactured by the Company are highly liquid and can be easily sold to generate cash or also be provided as a guarantee for financial transactions. In addition, part of the investments, especially those related to sugarcane plantation treatments, is supported by short-term financing and will be realized in the following harvest campaign.

27.3.1 Liquidity and interest rate tables

The tables below show in detail the expected maturity of the Group's financial liabilities:

Company

Less than 1 year

1 to 5 years

Over 5 years

Total

As at June 30, 2020

Borrow ings and financing

421.054

2.638.763

111.494

3.171.311

Lease liability

200.569

454.793

77.023

732.385

Derivative financial instruments

338.255

-

-

338.255

Trade payables

316.809

4.622

-

321.431

Accrued payroll and related taxes

56.607

-

-

56.607

Taxes payable

21.203

18.324

-

39.527

Other payables

68.228

65.195

-

133.423

1.422.725

3.181.697

188.517

4.792.939

As at March 31, 2020

Borrow ings and financing

2.935.559

67.484

-

3.003.043

Lease liability

215.257

444.809

72.048

732.114

Derivative financial instruments

575.188

-

-

575.188

Trade payables

309.104

5.733

-

314.837

Accrued payroll and related taxes

47.218

-

-

47.218

Taxes payable

21.314

18.501

-

39.815

Other payables

80.594

86.047

-

166.641

4.184.234

622.574

72.048

4.878.856

Consolidated

Less than 1 year

1 to 5 years

Over 5 years

Total

As at June 30, 2020

Borrow ings and financing

1.168.611

6.478.724

114.573

7.761.908

Lease liability

477.464

1.067.174

148.545

1.693.183

Derivative financial instruments

353.256

17.563

-

370.819

Trade payables

690.168

4.857

-

695.025

Accrued payroll and related taxes

110.115

-

-

110.115

Taxes payable

69.442

18.324

-

87.766

Other payables

114.509

135.643

-

250.152

2.983.565

7.722.285

263.118

10.968.968

As at March 31, 2020

Borrow ings and financing

7.225.234

96.191

-

7.321.425

Lease liability

498.932

1.029.154

153.183

1.681.269

Derivative financial instruments

586.843

16.596

-

603.439

Trade payables

798.903

5.965

-

804.868

Accrued payroll and related taxes

90.483

-

-

90.483

Taxes payable

75.152

18.501

-

93.653

Other payables

118.051

167.247

-

285.298

9.393.598

1.333.654

153.183

10.880.435

44

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

27.4 Capital risk

The Company manages its capital structure in order to safeguard a continuous return to the Company's shareholders. Company monitors capital through financial leverage index analysis; these indexes include adjusted net debt to adjusted EBITDA ratio. In turn, the net debt corresponds to total borrowings and financing (including short- and long-term borrowings and financing), less cash, cash equivalents, short-term investments and highly liquid inventory (ethanol, sugar and allowance for negative inventory margin).

The Company allocates the Libor swap contracts (see Note 27.1.2) to the adjusted net debt for capital risk analysis purposes.

The Company may change its capital structure, in conformity with economic and financial conditions, aiming at optimizing its financial leverage and/or debt management.

27.5 Margin calls

Derivative transactions in commodity exchanges (ICE and B3) require an initial margin call in guarantee.

To trade on the ICE, the margin call required, as at June 30, 2020, is R$32,652 (R$7,376 as at March 31, 2020), fully deposited by the Company's in cash, through fiduciary agent Term Commodities Inc., a company under common control.

To trade on the B3, the margin call required, as at June 30, 2020, is R$13,716 (R$26,502 as at March 31, 2020), deposited as Bank Deposit Certificate (CDB), in the amount of R$10,000 and R$11,371, in current account.

As at June 30, 2020, the Company's transactions in the over-the-counter market did not require an initial margin call in guarantee.

27.6 Categories of financial instruments

The financial instruments recorded in the balance sheet, such as cash and cash equivalents and borrowings and financing, are stated at contractual values, which approximate their fair values due to their short terms and/or characteristics.

The fair value of financial instruments not traded in active markets (for example, over-the-counter derivatives) is determined using valuation techniques. The Company uses several methods and makes assumptions that are based on existing market conditions at the end of the interim financial statements. The fair value of foreign exchange forwards is determined based on forward exchange rates quoted at the end of the interim financial statements.

The use of different market inputs and/or valuation techniques might result in amounts different from the recognized realizable value of financial instruments.

Classification

Company

Consolidated

CPC 48 / IFRS 9

06.30.20

03.31.20

06.30.20

03.31.20

Financial assets:

Cash and cash equivalents (Note 3)

Amortized cost

114.802

396.124

359.383

1.174.943

Short-term investments and debentures (Note 4)

Amortized cost

58.701

42.052

69.858

52.245

Trade receivables (Note 5)

Amortized cost

245.044

211.537

462.710

216.242

Derivatives designated as fair value hedge or not (Note 27)

VJR

90.444

225.676

94.564

281.561

Derivatives designated as cash flow hedge (Note 27)

VJORA

2.687

111

2.688

111

Financial liabilities:

-

-

Borrow ings and financing (Note 16)

Amortized cost

3.171.311

3.003.043

7.761.908

7.321.425

Lease liability (Note 12)

Amortized cost

732.385

732.114

1.693.183

1.681.269

Trade payables (Note 17)

Amortized cost

321.431

314.837

695.025

804.868

Other financial liabilities

Amortized cost

229.557

253.674

448.033

469.434

Derivatives designated as fair value hedge or not (Note 27)

VJR

65.583

361.781

67.444

389.743

Derivatives designated as cash flow hedge (Note 27)

VJORA

272.672

213.407

303.375

213.696

45

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

27.7 Measurement at fair value recognized in balance sheet

CPC 40 (R1) - Instrumentos Financeiros: Evidenciação/IFRS 7 - Financial Instruments: Disclosure defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the primary or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. CPC 40 (R1)/IFRS 7 also establishes a three-level fair value hierarchy, which prioritizes inputs for fair value measurement by an entity in order to maximize the use of observable data and minimize the use of unobservable data. CPC

40 (R1)/IFRS 7 describes the three levels of inputs that should be used to measure fair value, which are the following:

  • Level 1 - Quoted prices (unadjusted) in active markets for identical assets and liabilities.
  • Level 2 - Inputs other than the data included in Level 1, where prices are quoted (unadjusted).

Fair value measurements of Level 2 are obtained based on other variables besides quoted prices included in Level 1, which are directly or indirectly observable for an asset or liability.

  • Level 3 - Inputs for the asset or liability that are not based on observable market data (unobservable inputs) because market activity is insignificant or does not exist.

The Company's financial assets and liabilities measured at fair value on a recurring basis and subject to disclosure as required by CPC 40 (R1)/IFRS 7, as at June 30, 2020, are as follows:

Company

Consolidated

06.30.20

06.30.20

Level 1

Level 2

Total

Level 1

Level 2

Total

Financial assets at fair value through profit or loss

Derivative financial assets

2,374

90,757

93,131

2,374

94,878

97,252

2,374

90,757

93,131

2,374

94,878

97,252

Financial liabilities at fair value through profit or loss

Derivative financial liabilities

(2,435)

(335,820)

(338,255)

(2,434)

(368,385)

(370,819)

(2,435)

(335,820)

(338,255)

(2,434)

(368,385)

(370,819)

Company

Consolidated

03.31.20

03.31.20

Level 1

Level 2

Total

Level 1

Level 2

Total

Financial assets at fair value through profit or loss

Derivative financial assets

15,885

209,902

225,787

15,886

265,786

281,672

15,885

209,902

225,787

15,886

265,786

281,672

Financial liabilities at fair value through profit or loss

Derivative financial liabilities

(22,000)

(553,188)

(575,188)

(21,999)

(581,440)

(603,439)

(22,000)

(553,188)

(575,188)

(21,999)

(581,440)

(603,439)

27.8 Derivative and non-derivative financial instruments with the application of hedge accounting

In accordance with accounting practices adopted in Brazil, derivative financial instruments are accounted for at fair value through profit or loss, unless a derivative is designated for hedge accounting. A derivative only qualifies for hedge accounting when all the conditions set out by CPC 48/IFRS 9 are met. The adoption of hedge accounting is optional and aims at recognizing gains or losses on derivatives and debts only when the hedged item is realized on an accrual basis and, therefore, reducing the volatility of gains or losses from the mark-to-market of derivatives.

The Company applies hedge accounting to account for part of its derivative and non-derivative financial instruments.

27.8.1 Cash flow hedge

The cash flow hedge is characterized by the protection of a recognized liability (debt) and highly probable transactions (exports of sugar and ethanol expressed in US dollars) under CPC 48/IFRS 9, items 6.3.3/9 6.2.2. The hedge instruments are described below:

  • Recognized liability hedge: swap contracts subject to the Libor interest rate contracted to mitigate the effects from interest rate changes of the long-term debts, in which case the respective exposure is subject to a fixed interest rate; and

46

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

  • Highly probable transaction hedge: i) sugar futures contracts for purposes of price risk hedge; and ii) currency forward contracts (NDF) and US dollar-denominated debts (Natural HACC), both contracted to protect against exchange rate changes in the revenue from exports.

27.8.2 Fair value hedge

Such hedge comprises the use of "sugar futures" derivative instruments to protect against changes in fair value in connection with a sugar sales agreement.

27.8.3 Discontinued hedge accounting

As at March 31, 2019, the Company discontinued the revenue hedge accounting program (Natural HACC) with respect to the debts already designated. Such discontinuity resulted from the change in the Company's foreign exchange risk management, which aimed to offset the exchange rate changes of the debts against equity, which will be directly recorded in the finance income (costs) to be offset against the long positions expressed in foreign currency using derivative financial instruments - also recognized in finance income (costs) (CPC 48, items B6.5.26 (a) and B6.5.28 (b)).

The gains and losses recorded in equity, in line item "Other comprehensive income (loss), will be maintained in this reserve until the expected transaction is concluded, in which case the amounts will be reclassified to operating income (revenues) - aligned with revenues. In the event such transaction (revenue) is not concluded, the accumulated amounts will be fully reclassified to finance income (costs) under CPC 48.

As at June 30, 2020, the annual expected realization of derivatives recorded in equity is as follows:

Company

Hedge

Impact

2020/2021

2021/2022

2022/2023

2023/2024

2024/2025

2025 to 2028

Total

Exchange rate changes on future interest flow s (*)

Finance income (costs)

(3,861)

(3,854)

(2,367)

(1,226)

(733)

(759)

(12,800)

(3,861)

(3,854)

(2,367)

(1,226)

(733)

(759)

(12,800)

Consolidated

Hedge

Impact

2020/2021

2021/2022

2022/2023

2023/2024

2024/2025

2025 to 2028

Total

Exchange rate changes on future interest flow s (*)

Finance costs

(3,861)

(3,854)

(2,367)

(1,226)

(733)

(759)

(12,800)

Natural HACC

Operating losses

(60,692)

(79,173)

(79,173)

(25,544)

-

-

(244,582)

(64,553)

(83,027)

(81,540)

(26,770)

(733)

(759)

(257,382)

(*) Program discontinued in prior years.

27.8.4 Sensitivity analysis

The table below shows the Company's sensitivity to the presented risk factor, based on changes in the risk factor considered reasonably possible by management (probable scenario).

The probable scenario is obtained based on future dollar, sugar and ethanol (as at June 30, 2020) and the Group's expectations for each one of the variables indicated, over a twelve-month period.

As required by CVM Instruction 475/2008, the sensitivity analysis is also presented to changes in the fair value of financial instruments for another two scenarios, in which market conditions are stressed by 25% and 50%.

47

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

The derivative financial instruments are provided to hedge against risks from future cash flows. The non-derivative financial instruments must not be considered as the Company's net exchange exposure because the table below does not consider the biological asset, as it is not a financial instrument, but it is used in the production of sugar and ethanol for future exports. See Notes 7 and 27.8.

Company

Notional amount

Effects on fair value

Foreign currency

Risk factor

Probable scenario

25% stress

50% stress

Effects on profit or loss

(371.128)

Increase in US$

(1.148.020)

(1.644.418)

(3.268.915)

Exchange risk

176.119

Decrease in price

(302.583)

(256.589)

(531.973)

Sugar hedge accounting

176.119

Decrease in price

(302.583)

(256.589)

(531.973)

Effects on equity

(195.009)

(1.450.603)

(1.901.007)

(3.800.888)

Exchange risk

(315.213)

Increase in US$

(133.688)

(191.523)

(383.045)

Price risk

(112.033)

Increase in price

(178.259)

(152.536)

(305.072)

Sugar hedge accounting

(112.033)

Increase in price

(178.259)

(152.536)

(305.072)

Effects on equity

(427.246)

(311.947)

(344.059)

(688.117)

Consolidated

Notional amount

Effects on fair value

Foreign currency

Risk factor

Probable scenario

25% stress

50% stress

Exchange risk

(913.647)

Increase in US$

(3.239.547)

(4.641.017)

(9.261.614)

Price risk

44.219

Decrease in price

(523.050)

(446.431)

(903.415)

Sugar hedge accounting

44.219

Decrease in price

(523.050)

(446.431)

(903.415)

Effects on equity

(869.428)

(3.762.597)

(5.087.448)

(10.165.029)

Exchange risk

(315.213)

Increase in US$

(133.688)

(191.523)

(383.045)

Price risk

(112.033)

Increase in price

(178.259)

(152.536)

(305.072)

Sugar hedge accounting

(112.033)

Increase in price

(178.259)

(152.536)

(305.072)

Interest rate risk

135.935

Decrease in Libor rate

(343)

(685)

(1.370)

Effects on equity

(291.310)

(312.290)

(344.744)

(689.487)

As at June 30, 2020, the probable scenario considers the CDI rate projected for 12 months - disclosed at B3's website (DI swap reference rates x PRÉ) and the Libor rate for 12 months disclosed by Bloomberg. These rates were applied in the Company's exposure volume - composed of: borrowings and financing, advances from customers, cash and cash equivalents and short-term investments.

Based on the exposure in the probable scenario, a stress of 25% and 50% was applied taking into account the worst case scenarios in order to determine the impact on the Company's finance income (costs).

The consolidated sensitivity results are broken down below:

Company

Notional

Probable

amount

scenario

25% stress

50% stress

Operations indexed to CDI

(240,649)

(10,699)

(24,072)

(26,747)

Operations indexed to Lib

or

(698,693)

(13,360)

(30,060)

(33,400)

Total

(939,342)

(24,059)

(54,132)

(60,147)

Consolidated

Notional

Probable

amount

scenario

25% stress

50% stress

Operations indexed to CDI

(360,303)

(27,081)

(60,932)

(67,703)

Operations indexed to Lib

or

(2,266,615)

(43,173)

(97,139)

(107,932)

Total

(2,626,918)

(70,254)

(158,071)

(175,635)

48

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

28. COMMITMENTS a) Selling

The Group has several arrangements in the sugar and ethanol market under which it commits to sell volumes of these products in future crops. As at June 30, 2020, the volumes of these commitments total 1,750,036 tons of sugar (1,693,385 tons of sugar as at March 31, 2020), 480,268 cubic meters of ethanol (211,440 cubic meters as at March 31, 2020), and electricity supply commitments, assumed in power auctions and free market, which total 7,125 GWh to be supplied by 2035 (7,595 GWh as at March 31, 2020).

(b) Purchases

The Group has several commitments for the purchase of sugarcane from third parties to ensure part of its production in future crops. The volume of sugarcane to be purchased is estimated based on the expected productivity of the areas where the sugarcane plantations are located. The amount to be paid by the Group is determined at the end of each harvest campaign according to the price published by CONSECANA, plus or less other applicable contractual terms.

As at June 30, 2020, estimated purchase commitments by crop are as follows:

Consolidated

Area

Estimated quantity of

Estimated

Harvest

(hectares)

cane (ton)

amount

2020/2021

140,181

10,337,768

861,697

2021/2022

88,059

6,458,077

538,308

2022/2023

63,855

4,682,435

390,301

2023/2024

47,907

3,396,903

283,146

After 2024

46,300

3,112,495

259,440

386,302

27,987,678

2,332,893

The Group has commitments for the purchase of energy in the amount of 779 GWh (1,048 GWh as at March 31, 2020). The price of these agreements is bilaterally negotiated by the agents selling electric energy in the Free Trade Market (ACL).

c) Terminal de Exportação de Açúcar do Guarujá Limitada - TEAG

TEAG is a party to an agreement for the lease of a port terminal with Companhia Docas do Estado de São Paulo ("CODESP"), which provides for the payment by TEAG, as lease, of a fixed monthly installment of R$3,1137/m² calculated on a minimum area of 74,206.410 m² equivalent to R$231.06 per month or R$2,773 per year, plus a guaranteed variable minimum installment equivalent to R$5,328 per year payable to CODESP, corresponding to R$2.8400/ton calculated on a minimum handling of one million and five hundred thousand tons of cargo. TEAG operates under the concession agreement entered into with Companhia Docas do Estado de São Paulo (CODESP), falling due on July 6, 2038.

d) Lawsuits against Instituto do Açúcar e do Álcool - IAA

The Company is a plaintiff in lawsuits seeking a compensation from the Federal Government for losses arising from pricing differences incurred in the period in which sugar and ethanol prices were frozen. In some cases, upon effective receipt of the indemnities, a portion of the amount received will be transferred on behalf of third parties in connection with the contractual obligations.

e) Bank guarantees and collateral insurance

As at June 30, 2020, the balances of (i) bank guarantee is R$142,789 in Consolidated (R$142,240 in Consolidated as at March 31, 2020); and (ii) collateral insurance relating to lawsuits of R$250,624, in Company, and R$603,454 in Consolidated (R$277,600 and R$588,780 as at March 31, 2020, respectively).

49

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

29. EMPLOYEES' BENEFIT

The consolidated amount invested by the Company in the pension plan was R$364 in the period ended June 30, 2020 (R$347 as at June 30, 2019), recognized in line item "General, administrative and selling expenses". Due to the features and design of the pension plan, the Company does not incur any future postemployment or actuarial obligations.

As at June 30, 2020, the Company booked a liability related to the deferred variable compensation that will be paid to some eligible employees, according to the policy, in the amount of R$22,474 (R$26,021 as at March 31, 2020). Additionally, the Company has recorded a liability related to PPR (Profit Sharing Program), as set forth in the Collective Labor Agreement, in the amount of R$9,718 (R$31,550 as at March 31, 2020).

30. SEGMENT INFORMATION

Information by product margin, and geographic areas, used by the key decision makers is as follows:

Consolidated

Three-month period ended 06.30.20

Consolidated profit (loss) by product

Sugar

Ethanol

Energy

Other

Total

Net revenue

702,109

441,787

116,882

1,408,848

2,669,626

Cost of sales and services

(449,570)

(313,620)

(71,274)

(1,423,990)

(2,258,454)

Gross profit

252,539

128,167

45,608

(15,142)

411,172

Gross margin

36%

29%

39%

-1%

15%

Selling expenses

(60,692)

(17,379)

(2,619)

(260)

(80,950)

Operating margin

191,847

110,788

42,989

(15,402)

330,222

Consolidated

Three-month period ended 06.30.20

Sales by geographic area

Sugar

Ethanol

Energy

Other

Total

Asia

524,266

157,772

-

1,269,103

1,951,141

North America

21,592

48,943

-

-

70,535

South America

-

26,171

-

-

26,171

Africa

100,202

-

-

4,797

104,999

Europe

2,178

-

-

123,268

125,446

Foreign market

648,238

232,886

-

1,397,168

2,278,292

Domestic market

53,871

208,901

116,882

11,680

391,334

TOTAL

702,109

441,787

116,882

1,408,848

2,669,626

Consolidated

Three-month period ended 06.30.19

Consolidated profit (loss) by product

Sugar

Ethanol

Energy

Other

Total

Net revenue

285,757

696,154

108,007

628,446

1,718,364

Cost of sales and services

(234,892)

(541,976)

(74,523)

(636,237)

(1,487,628)

Gross profit

50,865

154,178

33,484

(7,791)

230,736

Gross margin

18%

22%

31%

-1%

13%

Selling expenses

(25,568)

(7,338)

(2,343)

-

(35,249)

Operating margin

25,297

146,840

31,141

(7,791)

195,487

50

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

Consolidated

Three-month period ended 06.30.19

Sales by geographic area

Sugar

Ethanol

Energy

Other

Total

Asia

135.403

-

-

512.390

647.793

North America

114.983

86.229

-

-

201.212

Africa

2.420

-

-

-

2.420

Europe

-

-

-

111.150

111.150

Foreign market

252.806

86.229

-

623.540

962.575

Domestic market

32.951

609.925

108.007

4.906

755.789

TOTAL

285.757

696.154

108.007

628.446

1.718.364

The Company's key decision makers use the operating margin as a tool to measure the recurring operating cash generation capacity and it also allows comparisons with other companies.

Consolidated

Three-month period ended

06.30.2006.30.19

Operating margin

330,222

195,487

Other operating expenses

(104,671)

(182,588)

Finance costs

(485,761)

(51,001)

Income tax and social contribution

(21,081)

(130,792)

Loss for the period

(281,291)

(168,894)

Information on key customers

In the period ended June 30, 2020, the Group has one customer, its related party Louis Dreyfus Company Suisse S.A., under common control, which accounts for 58% of the Group's consolidated revenue.

31. APPROVAL OF INTERIM FINANCIAL STATEMENTS

The interim financial statements were approved by the Company's Management and authorized for issue on September 17, 2020.

51

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

NON-STATUTORY AUDIT COMMITTEE OPINION

The non-statutory Audit Committee of Biosev S.A. ("Company"), jointly with representatives of the Company and of BDO RCS Auditores Independentes, independent auditors of the Company, examined the interim financial statements of the Company related to the period ended on June 30 th, 2020. Based in the analysis performed and considering the draft of the audit report, without remarks, prepared by BDO RCS Auditores Independentes, the non-statutory Audit Committee of the Company recommended to the Board of Directors of the Company, unanimously and without remarks, the approval of the referred interim financial statements.

São Paulo, September 16 th, 2020

FEDERICO ADRIAN CERISOLI

PATRICK JULIEN TREUER

ADRIAN LIMA DA HORA

52

Biosev S.A.

Notes to the Interim Financial Statements

For the Three-month Period Ended June 30, 2020

(Amounts in thousands of Brazilian reais, unless otherwise stated)

OPINIONS AND STATEMENTS

As Executive Officers of Biosev SA, we declare under, Article 25, Paragraph 1 st, Item V and VI, CVM Instruction 480 of December 7, 2009, as amended, that we reviewed, discussed and agreed with the interim financial statements and the terms of the external auditors report on the interim financial statements related to the period ended on June 30 th, 2020.

São Paulo, September 17 th, 2020

Juan Jose Blanchard

Chief Executive Officer

Leonardo Oliveira D'Elia

Chief Financial and Investor Relations Officer

Ricardo Lopes da Silva

Chief Operating Officer

53

HISTORICAL OPERATIONAL RECORDS

São Paulo, September 17, 2020 - Biosev, one of the world's largest sugarcane processors, announces

its results for the first quarter of the 2020/21 crop.

1Q21 HIGHLIGHTS

  • Historical operational records for the period:
    • Crushing volume totaled 11.6 million tons in the 1Q21, 6.9% higher than in 1Q20;
    • Product TRS totaled 129.0 kg TRS/ton, an increase of 10.6% compared to 1Q20;
    • Total Product TRS was 1,498 thousand tons, an increase of 18.3% compared to 1Q20, mainly due to the 739 thousand tons of sugar produced, also a record for the period;
  • Consolidated agricultural yield (TCH) increased by 2.9% to 94.5 ton/ha in the quarter;
  • Sugar mix was 51.6% in the 1Q21, due to its higher profitability in relation to ethanol, an increase of 17.9 p.p. compared to 1Q20. Anhydrous mix was 33.3%, in line with the same period of the previous crop;
  • Industrial efficiency increased by 3.1% to 1.042 in the quarter.
  • Net Revenue ex-HACC/other produts of R$ 1.3 billion, 13.8% higher than in 1Q20;
  • Net Operating Result was an income of R$ 186.5 million in the 1Q21, compared to the net operating result that was an expense of R$ 13.2 million in 1Q20.
  • Adjusted EBITDA ex-resale/HACC totaled R$369.1 million, an increase of 8.9%; EBITDA per unit was R$31.7 per ton, an increase of 1.8% and EBITDA Margin was 33.9%, stable compared to 1Q20;

B3: BSEV3

Stock price on 9/16/2020: R$5.00 | Number of shares: 1,020,429,426 | Market cap: R$5.1 billion

Conference Call in Portuguese with translation into English: September 18, 2020

12:00 p.m. (Brasília - BRT) | 10:00 a.m. (NY - EST) | 3:00 p.m. (London - GMT) Portuguese: (11) 3181-8565 | English: +1 (412) 717-9627

Code: Biosev

Investor Relations

E-mail:ri@biosev.com

Telephone: (11) 3092-5291

http://ri.biosev.com

1

1. OPERATING PERFORMANCE

The following table presents key indicators for operating efficiency, productivity and production volumes, which are analyzed in this section:

Efficiency and Productivity

1Q21

1Q20

%

Crushing (thousand tons)

11,633

10,883

6.9%

TCH (ton/ha)

94.5

91.8

2.9%

Product TRS (Kg TRS/ton)

129.0

116.6

10.6%

Industrial efficiency

1.042

1.011

3.1%

Production

1Q21

1Q20

%

Sugar mix (%)

51.6%

33.7%

17.9 p.p.

Ethanol mix (%)

48.4%

66.3%

-17.9 p.p.

Anhydrous mix (%)

33.3%

33.7%

-0.4 p.p.

Production (thousand tons of Product TRS) ¹

1,498

1,266

18.3%

Sugar (thousand tons)

739

408

81.4%

Ethanol (thousand m³)

426

494

-13.8%

Cogeneration (GWh)

344.5

311.1

10.7%

  • Considers the ratios of conversion of sugar and ethanol in the State of São Paulo, as disclosed in the Consecana Manual.

In order to improve the management of both industrial and agricultural assets, as from the 2020/21 crop, the Company changed the composition of its clusters. The Ribeirão Preto Norte cluster is now composed by the Continental and Lagoa da Prata plants and the Ribeirão Preto Sul cluster is now composed by the Santa Elisa, Leme, Vale do Rosário and MB (Morro Agudo) plants.

2

1.1. Crushing

The following table shows crushing volume on a consolidated basis and by cluster:

Efficiency

1Q21

1Q20

%

Crushing ('000 tons)

11,633

10,883

6.9%

Own

6,935

6,558

5.7%

Third Parties

4,698

4,325

8.6%

Ribeirão Preto Norte Cluster

2,175

1,838

18.3%

Ribeirão Preto Sul Cluster

6,798

6,222

9.3%

Mato Grosso do Sul Cluster

2,660

2,823

-5.8%

The Company reached total crushing volume of 11.6 million tons in 1Q21, historical record for the period, which represented an increase of 6.9% compared to 1Q20, mainly reflecting the higher yield measured by TCH (+2.9%), favorable (drier) weather conditions during the harvest period (April to June), and improved operational performance, partially offset by the frost mitigation strategy at the Mato Grosso do Sul Cluster.

At the Ribeirão Preto Norte Cluster, crushing volume was 2.2 million tons, 18.3% higher than in 1Q20, mainly supported by the 5.4% increase in TCH and improved operational performance.

At the Ribeirão Preto Sul Cluster, crushing volume was 6.8 million tons, 9.3% higher than in 1Q20, mainly supported by the 6.2% increase in TCH and improved operational performance.

At the Mato Grosso do Sul Cluster, crushing volume was 2.7 million tons, 5.8% lower than in 1Q20, reflecting the Company's strategy to mitigate the effects from the frost that affected the region in the previous crop and in the first quarter of the current crop (accelerating harvest and crushing operations as from the second quarter of the previous crop to mitigate impacts on sucrose quality and accumulation), which consequently reduced the cluster's TCH by 5.5% in 1Q21.

1.2. Tons of Cane per Hectare (TCH)

The following table shows the evolution in TCH on a consolidated basis and by cluster:

Productivity

1Q21

1Q20

%

TCH - Agricultural yield (ton/ha)

94.5

91.8

2.9%

Ribeirão Preto Norte Cluster

97.1

92.2

5.4%

Ribeirão Preto Sul Cluster

99.4

93.6

6.2%

Mato Grosso do Sul Cluster

83.3

88.2

-5.5%

Cane yield measured by consolidated TCH reached 94.5 ton/ha in the first quarter of the 2020/21 crop, 2.9% higher than in the first period of the previous crop, which is basically explained by the application of best agronomic practices in crop regeneration to the sugar plantations, such as vinasse handling, organic fertilization, foliar treatments, among others, in addition to the favorable weather conditions during the field development period (January to March), partially offset by the frost that affected the region of the Mato Grosso do Sul Cluster in the second quarter of the previous crop and the first quarter of the current crop.

3

1.3. Product Total Recoverable Sugar (TRS)

The following table shows the evolution of Product TRS and by cluster:

Productivity

1Q21

1Q20

%

Product TRS (Kg TRS/ton)

129.0

116.6

10.6%

Ribeirão Preto Norte Cluster

131.6

121.2

8.6%

Ribeirão Preto Sul Cluster

128.9

117.3

9.9%

Mato Grosso do Sul Cluster

127.1

112.0

13.5%

Product TRS content was 129.0 kg TRS/ton in the 1Q21, historical record for the period, an increase of 10.6% compared to 1Q20, which reflects the continuous impacts of the evolution of the phytosanitary quality of the sugarcane crop, the quality of the harvesting processes, the intensive use of ripening agents, an improved operational performance and favorable (drier) weather conditions during the harvest, which favors concentration of sugar content.

Industrial efficiency reached 1.042 in the quarter, an increase of 3.1% compared to 1Q20. The results demonstrate the higher efficiency in converting cane into the final products of sugar and ethanol, as well as the lower losses in production processes. Industrial efficiency is calculated based on the volume of TRS produced by the mills.

Total production in tons of Product TRS was 1,498 thousand tons, historical record for the period, an increase of 18.3% compared to 1Q20, mainly due to the evolution of the sugarcane crop and industrial efficiency gains (+3.1%).

Sugar mix was 51.6%, due to the higher allocation of TRS to sugar production, given the product's higher profitability in the period compared to ethanol, an increase of 17.9 p.p. compared to the same period of the previous crop, which was more focused on ethanol (mix of 66.3% in 1Q20).

Anhydrous mix (anhydrous ethanol as a share of total ethanol production) was 33.3% in 1Q21, in line with 1Q20, reflecting the commercial strategy to focus on higher-value products, including ethanol by- products.

1.4. Cogeneration

The following table presents productivity and cogeneration volume for sale:

Production

1Q21

1Q20

%

Total Cogen (GWh)

344.5

311.1

10.7%

Cogen for Sale (GWh)

344.5

311.1

10.7%

Ribeirão Preto Norte Cluster

45.9

33.3

37.9%

Ribeirão Preto Sul Cluster

165.8

145.1

14.2%

Mato Grosso do Sul Cluster

132.8

132.7

0.0%

Cogen for Sale/Crushing (kWh/ton)

32.5

31.0

4.9%

Ribeirão Preto Norte Cluster

40.7

33.9

20.0%

Ribeirão Preto Sul Cluster

24.4

23.3

4.6%

Mato Grosso do Sul Cluster

49.9

47.0

6.2%

The Company has cogeneration power plants at all its eight industrial sites and is energy self-sufficient during the harvesting period. Out of these units, seven produce surplus electricity for sale.

Total cogeneration for sale in 1Q21 increased by 10.7% compared to 1Q20, and reached a volume of

4

344.5 GWh, mainly due to the higher crushing volume compared to the previous period (+6.9%).

The cogeneration volume of the MS Cluster, despite lower crushing volume (-5.8%) compared to 1Q20, remained in line with the previous crop, which reiterates the superior industrial efficiency of the cluster in the period (+4.9%), in line with 1Q20. The cogeneration volume of the other clusters increased by 18.7% on average, compared to 1Q20.

The productivity of cogeneration units measured in kWh of power sold per ton of cane crushed stood at

32.5 kWh/ton in 1Q21, an increase of 4.9% compared to 1Q20. These results reflect the higher total crushing volume and the Company's strategy to optimize sales by prioritizing products and periods that generate higher added value.

5

2. ECONOMIC AND FINANCIAL PERFORMANCE

2.1. Net Revenue

Net revenue excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC) amounted to R$2.7 billion, the Company's record quarterly revenue, an increase of 53.4% compared to 1Q20. The result is primarily explained by the growth in sugar export volumes, the higher crushing volume, the higher industrial efficiency in sugarcane conversion, the higher average ethanol export prices, and the revenues from export performance contracts associated with the rollover of foreign currency-denominated debt obligations, with these factors partially offset by the decrease in ethanol import volumes, the average sugar export prices, and by the fact that previous crop included revenue from the Nordeste Cluster. Note that, excluding the revenue from the Nordeste Cluster in the previous crop to improve the comparison with the current crop, net revenue would be 53.9% higher than in 1Q20.

Excluding the effects from resale operations (of finished products, such as (i) sugar, ethanol and energy; and (ii) other commodities, which are required to comply with export performance contracts associated with obligations denominated in foreign currency), the Company's net revenue was R$1.1 billion, an increase of 9.7% compared to 1Q20, mainly due to the growth in sugar and ethanol export volumes and the higher average ethanol export prices, partially offset by the decrease in ethanol import volumes and respective average price and by the fact that previous crop included revenue from the Nordeste Cluster. Note that, excluding the revenue from the Nordeste Cluster in the previous crop to improve the comparison with the current crop, net revenue would be 10.3% higher than in the 1Q20.

The following table presents a breakdown of net revenue ex-HACC:

Net revenue ex-HACC (R$ thousand)

1Q21

1Q20

%

Sugar

715,593

311,464

129.8%

Domestic market

53,871

32,951

63.5%

Export market

661,722

278,513

137.6%

Ethanol

446,785

704,315

-36.6%

Domestic

208,901

609,925

-65.7%

Export market

237,884

94,390

152.0%

Energy

116,882

108,007

8.2%

Total

1,279,259

1,123,786

13.8%

Other Products

1,408,848

628,446

124.2%

Bagasse, services and others

11,680

4,906

138.0%

Export performance contracts

1,397,168

623,539

124.1%

Total

2,688,107

1,752,231

53.4%

  • 1Q20 includes amounts from the Nordeste Cluster.

Revenue from resale operations is detailed in the following table:

Resale operations (R$ thousand)

1Q21

1Q20

%

Sugar, ethanol and energy ¹

202,214

136,579

48.1%

Export performance contracts

1,397,168

623,539

124.1%

Total

1,599,382

760,118

110.4%

  • Revenue from resales of sugar, ethanol and energy is accounted for in the lines corresponding to the respective products in the table of Net Revenue ex-HACC.

6

The following charts present a breakdown of net revenue ex-HACC, excluding the effects from hedge accounting and revenue from export performance contracts, by product and by market in the respective periods:

Net revenue ex-HACC/export performance

by product (%)

Net revenue ex-HACC/export performance

by market (%)

The following table presents the sugar and ethanol inventory balance variation when compared to the beginning of each crop, showing a higher carry out when compared to the same period of the previous crop due to the Company's strategy to optimize sales by prioritizing periods that capture higher value added:

Inventories - Variation

1Q21

1Q20

%

Sugar ('000 tons)

278

196

42%

Ethanol ('000 m3)

232

149

55%

7

2.1.1. Sugar

Net revenue from sugar sales excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC) amounted to R$715.6 million, an increase of 129.8% compared to the 1Q20, mainly due to the higher export volumes, partially offset by the lower average prices. This variation reflects (i) the production mix, which prioritized sugar, given the product's higher profitability in the period compared to ethanol; (ii) higher crushing volume; (iii) improved operational performance, which translates into higher efficiency in sugarcane conversion; and (iv) average prices of the product in the international market, compared to the previous crop.

The following chart presents a comparison of sugar volumes and average prices, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):

Volume (thousand tons) and Average Price (R$/ton)

The following charts present a breakdown by type of sugar, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):

Net Revenue ex-HACC

by Sugar Type (%)

8

2.1.2. Ethanol

Net revenue from ethanol sales excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC) amounted to R$446.8 million, a decrease of 36.6% compared to the 1Q20, when the sales volume in the period decreased 38.5% due to a shift in the sugar mix and higher carry out in the period.

The price increased 3.2% when compared to 1Q20, although the average market price decreased 12%, especially due to the increase in ethanol exports due to the Company's strategy to optimize sales by prioritizing products and periods that capture higher value added, reflecting the ethanol competitiveness in the foreign market, improved by the depreciation in the Brazilian real against the U.S. dollar. Note that, excluding the revenue from the Nordeste Cluster in the previous crop to improve the comparison with the current crop, net revenue would be 36.1% lower than in the 1Q20.

The following chart presents a comparison of ethanol sales volumes and average prices, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):

Volume (thousand m³) and Average Price (R$/m³)

The following chart presents a breakdown of revenue by type of ethanol, excluding the non-cash effects from the hedge accounting of foreign currency-denominated debt (HACC):

Net Revenue ex-HACC

by Ethanol Type (%)

9

2.1.3. Energy

Net revenue from energy was R$116.9 million, an increase of 8.2% compared to the 1Q20. This variation is mainly due to the higher sales volume impacted by the higher crushing volume and partially offset by lower average sales prices in the period of 3%, which were less than the decrease in the average market price of 43%.

The following chart presents a comparison of energy own sales volume and average own sales price.

Sales Volume (GWh) and Average Sales Price (R$/MWh) - Own

2.1.4. Other products

The line item "Other products" records revenue from sales of raw bagasse, services and other items, in addition to revenue from the sale of commodities in the spot market to fulfill export contracts with the aim of settling debt obligations in foreign currency.

Revenue from the sale of other products totaled R$1.4 billion, an increase of 124.2% compared to the 1Q20, mainly due to the growth in the above-referred export performance contracts.

10

2.2. Cost of Goods Sold (COGS)

The Company has continued to consistently deliver cost reductions, while consolidating initiatives to adjust structures and become more resilient in an environment of still highly challenging pricing.

In nominal terms, cash COGS ex-resale totaled R$552.7 million, an increase of 6.2% compared to 1Q20, due to higher sales volumes, increase of 10.4% in the CONSECANA price index in the period, and advanced recognition of raw material costs in view of the higher crushing volume (to be compensated later in the crop), partially offset by the reductions in operating costs under the ongoing process to streamline costs and structures.

COGS per unit was R$672 per ton, an increase of 4.5% compared to 1Q20, mainly impacted by the increase of 10.4% in the CONSECANA price index in the period, and advanced recognition of raw material costs in view of the higher crushing volume (to be compensated later in the crop).

The following tables present a breakdown of total COGS and cash COGS:

COGS and cash COGS (R$ thousand) ³

1Q21

1Q20

%

Total COGS

(2,297,420)

(1,513,659)

51.8%

Non-cash items

(115,711)

(219,571)

-47.3%

Depreciation and amortization

(329,540)

(312,968)

5.3%

Gains (losses) in biological assets ¹

213,829

93,397

128.9%

Cash COGS

(2,181,709)

(1,294,088)

68.6%

Personnel

(117,709)

(114,618)

2.7%

Raw materials ²

(388,420)

(373,024)

4.1%

Inputs

(46,567)

(33,030)

41.0%

Resale of goods

(1,629,013)

(773,416)

110.6%

Sugar, ethanol and energy

(223,888)

(145,068)

54.3%

Export performance contracts

(1,405,125)

(628,348)

123.6%

Cash COGS ex-resale

(552,696)

(520,672)

6.2%

  • Gains (losses) from the fair value adjustment less estimated cost of sales of biological assets. ² Sugarcane, lease and HLT. ³ Excluding the effect from IFRS16.

Cash COGS ex-resale (R$ thousand) ¹

1Q21

1Q20

%

Agricultural costs

(462,563)

(447,808)

3.3%

HLT (own + third-party cane)

(142,020)

(163,949)

-13.4%

Land lease

(114,450)

(110,822)

3.3%

Purchases of third-party cane

(206,093)

(173,036)

19.1%

Industrial costs

(76,103)

(56,454)

34.8%

Others

(14,030)

(16,411)

-14.5%

Cash COGS ex-resale

(552,696)

(520,672)

6.2%

Product TRS sold ex-resale (thousand tons)

823

810

1.6%

Cash COGS ex-resale (R$/ton)

(672)

(643)

4.5%

¹ Excluding the effect from IFRS16.

11

2.3. Selling, General and Administrative (SG&A) Expenses

SG&A expenses totaled R$149.7 million, an increase of 43.9% compared to 1Q20.

Selling expenses totaled R$80.9 million, an increase of 129.7% compared to 1Q20, due to the difference in the composition of the sales mix in the period, focused on the sugar mix and the increase in exports, which increased the demurrage and port storage expenses.

General and administrative expenses totaled R$68.7 million, in line with with 1Q20, mainly due to the effects from the ongoing process to streamline operating and organizational structures, fully offset against the increase in consulting expenses in the period.

Depreciation expenses recognized under SG&A expenses totaled R$5.0 million in 1Q21, compared to R$5.3 million in 1Q20.

The following table presents a comparison of cash SG&A expenses between periods:

Cash SG&A (R$ thousand) ¹

1Q21

1Q20

%

Selling

(80,950)

(35,249)

129.7%

Freight

(54,808)

(26,911)

103.7%

Shipping charges

(22,919)

(5,392)

325.1%

Commissions, wharfage and other

(3,223)

(2,946)

9.4%

General and administrative

(68,753)

(68,765)

0.0%

Personnel

(32,068)

(42,999)

-25.4%

Services

(31,496)

(19,523)

61.3%

Other

(5,189)

(6,243)

-16.9%

Cash SG&A

(149,703)

(104,014)

43.9%

¹ Excluding the effect from IFRS16.

12

2.4. EBITDA

The following table presents a breakdown of Adjusted EBITDA ex-resale/HACC:

EBITDA composition (R$ thousand)

1Q21

1Q20

%

Net revenue

2,669,626

1,718,364

55.4%

Cash COGS

(2,181,709)

(1,294,088)

68.6%

Gross profit (cash)

487,917

424,276

15.0%

Cash SG&A

(149,703)

(104,014)

43.9%

TEAG - profit or loss ¹

(835)

(1,375)

-39.3%

Other operating income (expenses)

(28,018)

(105,125)

-73.3%

Non-recurring items

11,665

78,168

-85.1%

Adjusted EBITDA

321,026

291,930

10.0%

Adjusted EBITDA margin

12.0%

17.0%

-5.0 p.p.

Resale effect ²

29,631

13,298

122.8%

HACC effect ³

18,481

33,868

-45.4%

EBITDA ex-resale/HACC

369,138

339,095

8.9%

EBITDA margin ex-resale/HACC

33.9%

34.2%

-0.3 p.p.

Crushing (thousand tons)

11,633

10,883

6.9%

Adjusted EBITDA per unit (R$/ton)

27.6

26.8

2.9%

EBITDA per unit ex-resale/HACC (R$/ton)

31.7

31.2

1.8%

  • Equivalent to the share of 50% held in the Guarujá Sugar Terminal (TEAG). ² Reverses the impacts of resale of sugar, ethanol, energy and export performance operations. ³ Reverses the non-cash effects from the hedge accounting of foreign currency-denominated debt. Excluding the effect from IFRS16.

Adjusted EBITDA ex-resale/HACC (which excludes from the net revenue calculation the effects from resale operations, the non-cash hedge accounting of foreign currency-denominated debt, and IFRS 16) totaled R$369.1 million, with EBITDA margin of 33.9% and EBITDA per unit of R$31.7 per ton, mainly due to the increase in net revenue by virtue of the operational improvements, partially offset by the increase in COGS and SG&A expenses, reflecting the impact of 10.4% in the CONSECANA price index in the period and the changes in the sales mix composition.

The following table presents a reconciliation of Adjusted EBITDA with the Income Statement in the periods:

EBITDA reconciliation (R$ thousand)

1Q21

1Q20

%

Profit or loss for the year/period

(281,291)

(168,894)

66.5%

Income tax and social contribution

21,081

130,792

-83.9%

Financial expenses, net

485,762

51,001

852.5%

Depreciation, amortization and depletion

453,749

436,155

4.0%

EBITDA CVM 527

679,301

449,054

51.3%

Losses (gains) in biological assets ¹

(213,829)

(93,397)

128.9%

Concession amortization - TEAG

2,100

2,100

0.0%

Non-recurring items

11,665

78,168

-85.1%

IFRS16 impacts

(158,211)

(143,995)

9.9%

Adjusted EBITDA

321,026

291,930

10.0%

Adjusted EBITDA Margin

12.0%

17.0%

-5.0 p.p.

¹ Losses (gains) from the fair value adjustment less estimated cost of sales of biological assets.

13

2.5. Hedge

The following table shows the aggregate position of our hedged sugar volumes and prices (via commodity and foreign exchange derivative contracts) as at June 30, 2020:

Hedge on 06/30/2020

20/21 Crop

21/22 Crop

Sugar (#NY11)

Volume ('000 tons)

1,036

470

Average Price (cUS$/lb)

13.13

13.81

FX (US$)

Amount (US$ million)

306

115

Average Price (R$/US$)

4.455

4.278

Hedged Price (cR$/lb) w/o Pol.

Hedged Price (cR$/lb) w/ Pol.

Exposure Hedged (%) - Net Consecana

58.49 59.09

60.95 61.57

88.0% 54.0%

14

2.6. Financial Results

Excluding the effects from exchange variation, the net financial result was an expense of R$62.6 million, compared to an expense of R$93.3 million in 1Q20. The variation is mainly explained by the higher gains from the settlement and mark-to-market adjustment of derivatives positions, partially offset by the lower interest income from short-term investments in the period.

Including exchange variation, the net financial result was an expense of R$446.0 million in 1Q21. Exchange variation had a negative impact mainly due to the 5.3% depreciation of the Brazilian real against the U.S. dollar; in 1Q20, the net financial result was an expense of R$17.0 million, positively impacted by exchange rate changes (a 1.7% appreciation of the Brazilian real against the U.S. dollar), as shown in the following table:

PTAX in the period

1Q21

1Q20

%

Initial - as at March 31

5.1987

3.8967

33.4%

Final - as at June 30

5.4760

3.8322

42.9%

Variation

5.3%

-1.7%

7.0 p.p.

The following table shows the changes in the financial income (expenses) between the periods:

Financial income (expenses) (R$

1Q21

1Q20

%

thousand) ¹

Net financial expenses

(446,007)

(16,994)

2524.5%

Exchange rate changes (FX)

(383,429)

76,284

-602.6%

Financial expenses before FX

(62,578)

(93,278)

-32.9%

Interest expenses

(117,181)

(111,918)

4.7%

Income from short-term investments

1,786

5,553

-67.8%

Derivative transactions

49,376

9,279

432.1%

Other income (expenses)

3,441

3,808

-9.6%

  • Excluding the effect from IFRS16.

15

2.7. Profit or Loss for the Period

Net loss for the period totaled R$280.8 million, compared to a loss of R$163.7 million in 1Q20. In view of the aforementioned factors, net loss for the period was mainly caused by exchange variation, which was partially offset by higher net revenues and higher gains from the settlement and mark-to-market adjustment of derivatives.

16

3. INVESTMENTS

The Company invested R$242.8 million in the period, a decrease of 5.8% compared to 1Q20. This variation reflects the strategy to cut costs and increase competitiveness, based on the pillars of managing cane fields for greater longevity and productivity, and crop treatment systems that maximize the use of inputs produced by the Company's own units.

The investments were again concentrated in planting and treatment, partially offset by lower allocations to industrial maintenance. The costs resulted from higher plantation volume and largest cultivation area, impacted by the exchange rate changes in input costs.

Investments (R$ thousand) ¹

1Q21

1Q20

%

Expansion

3,254

2,629

23.8%

Operations

236,137

232,860

1.4%

Industrial

11,361

3,675

209.1%

Agriculture

665

18,469

-96.4%

Planting

115,596

112,048

3.2%

Treatment

106,114

92,216

15.1%

Other

2,401

6,451

-62.8%

Intercrop deferred costs

3,413

22,210

-84.6%

CAPEX

242,805

257,699

-5.8%

  • 1Q20: Ex-NE cluster for comparion purposes.

4. EBITDA LESS CAPEX

EBITDA less CAPEX is presented in the table below:

(R$ thousand) ¹

1Q21

1Q20

%

EBITDA ex-resale/HACC

369,138

339,095

8.9%

CAPEX

242,805

257,699

-5.8%

EBITDA ex-resale/HACC less CAPEX

126,333

81,396

55.2%

  • Excluding the effect from IFRS16.

17

5. DEBT

The Company's gross debt totaled R$7.8 billion as at June 30, 2020, an increase of 31.8% compared to June 30, 2019, mainly due to the effect from the 42.9% depreciation of the Brazilian real against the U.S. dollar on the dollar-denominated portion of its debt.

The balance of cash and short-term investments totaled R$429 million, out of which 55.7% was denominated in U.S. dollar. This variation reflects the Company's strategy to optimize sales by prioritizing products and periods that capture higher value added.

In view of the aforementioned factors, net debt totaled R$7.3 billion, an increase of 36.0% compared to the position as at June 30, 2019.

The following table presents a breakdown of the debt position:

Debt (R$ million) ¹

06/30/2020

06/30/2019

Variation

Gross debt

(7,762)

(5,891)

31.8%

Short term

(1,169)

(436)

168.2%

Long term

(6,593)

(5,455)

20.9%

Cash and short-term investments

429

498

-13.7%

Net debt

(7,333)

(5,393)

36.0%

Adjusted EBITDA LTM

2,141

1,704

25.7%

Net debt/adjusted EBITDA LTM

3.42x

3.17x

8.2%

¹ LTM: last twelve months

The following charts present a breakdown of debt by index and instrument as at June 30, 2020, as well as the cash position and short-term investments by currency:

The hedged position related to foreign currency indebtedness on June 30, 2020 was USD 252.5 million.

18

The following chart shows the cash position and debt amortization schedule:

19

6. CAPITAL MARKETS

At the closing of 1Q21, the Company's market capitalization totaled R$3.4 billion. Its stock performance in the last 12 months compared to Ibovespa is shown below:

Performance BSEV3 versus IBOV

Source: Bloomberg, June 30, 2020

20

7. APPENDICES

7.1. IFRS16

The IFRS 16/CPC 06 (R2) Leases standard, adopted as of April 1, 2019, changed accounting for lease agreements and agricultural partnerships, which are now treated similarly to financing transactions related to the acquisition of 'right of use of assets,' and payments for which, previously recorded as operating costs and expenses, are now recognized as depreciation or amortization and financial expenses.

Before

IFRS16

After

Before

IFRS16

After

Statement of Profit and Loss (R$

IFRS16

effects

IFRS16

IFRS16

effects

IFRS16

thousand)

1Q21

1Q20

GROSS REVENUE

2,728,766

-

2,728,766

1,845,683

-

1,845,683

Taxes and sales deductions

(59,140)

-

(59,140)

(127,319)

-

(127,319)

NET REVENUE

2,669,626

-

2,669,626

1,718,364

-

1,718,364

COGS

(2,297,420)

38,966

(2,258,454)

(1,513,659)

26,031

(1,487,628)

Depreciation and amortization

(329,540)

(118,703)

(448,243)

(312,968)

(117,376)

(430,344)

Raw materials

(388,420)

156,995

(231,425)

(373,024)

142,036

(230,988)

Industrial inputs and services

(46,567)

674

(45,893)

(33,030)

1,371

(31,659)

GROSS PROFIT

372,206

38,966

411,172

204,705

26,031

230,736

OPERATING INCOME (EXPENSES)

(185,677)

57

(185,620)

(217,896)

59

(217,837)

SG&A expenses

(154,724)

57

(154,667)

(109,296)

59

(109,237)

Depreciation and amortization

(5,021)

(485)

(5,506)

(5,282)

(529)

(5,811)

Other

(5,189)

542

(4,647)

(6,243)

588

(5,655)

Equity income (loss) in subsidiaries

(2,935)

-

(2,935)

(3,475)

-

(3,475)

Other operating income (expenses)

(28,018)

-

(28,018)

(105,125)

-

(105,125)

PROFIT (LOSS) BEFORE FINANCIAL

186,530

39,022

225,552

(13,191)

26,090

12,899

RESULT

Net financial income (expenses)

(446,007)

(39,755)

(485,762)

(16,994)

(34,007)

(51,001)

Financial Income

8,512

-

8,512

12,967

-

12,967

Financial Expenses

(120,466)

(39,755)

(160,221)

(115,524)

(34,007)

(149,531)

Interest Expenses

(117,181)

(39,755)

(156,936)

(111,918)

(34,007)

(145,925)

Derivatives

49,376

-

49,376

9,279

-

9,279

FX Variation

(383,429)

-

(383,429)

76,284

-

76,284

PROFIT (LOSS) BEFORE TAXES ON

(259,478)

(732)

(260,210)

(30,185)

(7,917)

(38,102)

INCOME

Income tax and social contribution

(21,330)

249

(21,081)

(133,484)

2,692

(130,792)

NET INCOME (LOSS)

(280,808)

(483)

(281,291)

(163,669)

(5,225)

(168,894)

21

7.2. Statement of Profit and Loss for the Period

Statement of Profit and Loss (R$ thousand)

1Q21

1Q20

%

GROSS REVENUE

2,728,766

1,845,683

47.8%

Taxes and sales deductions

(59,140)

(127,319)

-53.5%

NET REVENUE

2,669,626

1,718,364

55.4%

Cost of sales

(2,258,454)

(1,487,628)

51.8%

GROSS PROFIT

411,172

230,736

78.2%

OPERATING INCOME (EXPENSES)

(185,620)

(217,837)

-14.8%

General and administrative

(73,717)

(73,988)

-0.4%

Selling

(80,950)

(35,249)

129.7%

Equity income (loss) in subsidiaries

(2,935)

(3,475)

-15.5%

Other operating income (expenses)

(28,018)

(105,125)

-73.3%

PROFIT (LOSS) BEFORE FINANCIAL RESULT

225,552

12,899

1648.6%

Net financial income (expenses)

(485,762)

(51,001)

852.5%

Financial income

8,512

12,967

-34.4%

Finance expenses

(160,221)

(149,531)

7.1%

Derivatives

49,376

9,279

432.1%

Exchange rate changes

(383,429)

76,284

-602.6%

PROFIT (LOSS) BEFORE TAXATION

(260,210)

(38,102)

582.9%

Income tax and social contribution

(21,081)

(130,792)

-83.9%

PROFIT (LOSS) FOR THE PERIOD

(281,291)

(168,894)

66.5%

22

7.3. Balance Sheet - Assets

ASSETS (RS thousand)

06/30/2020

03/31/2020

%

CURRENT ASSETS

Cash and cash equivalents

359,383

1,174,943

-69.4%

Short-term investments

69,858

52,245

33.7%

Derivative financial instruments

97,252

225,787

-56.9%

Trade receivables

448,749

202,050

122.1%

Inventories

2,755,825

2,948,633

-6.5%

Biological assets

775,238

663,908

16.8%

Recoverable taxes

153,299

158,777

-3.5%

Other receivables

100,907

88,170

14.4%

Assets held for sale

37,777

45,165

-16.4%

Total current assets

4,798,288

5,559,678

-13.7%

NON-CURRENT ASSETS

Trade payables

59,136

56,602

4.5%

Escrow deposits

383,113

385,413

-0.6%

Recoverable taxes

82,003

57,529

42.5%

Derivative financial instruments

-

55,885

-100.0%

Deferred income tax and social contribution

856,718

872,971

-1.9%

Other receivables

319,104

320,012

-0.3%

Right to use leasehold assets

1,588,562

1,577,379

0.7%

Investments

157,457

160,393

-1.8%

Property, plant and equipment

3,266,705

3,477,391

-6.1%

Intangible assets

920,138

921,964

-0.2%

Total non-current assets

7,632,936

7,885,539

-3.2%

TOTAL ASSETS

12,431,224

13,445,217

-7.5%

23

7.4. Balance Sheet - Liabilities and Equity

LIABILITIES AND EQUITY (R$ thousand)

06/30/2020

03/31/2020

%

CURRENT LIABILITIES

Borrowings and financing

1,168,611

7,225,234

-83.8%

Liabilities from lease operations

477,464

498,932

-4.3%

Advances from domestic customers

140,694

28,128

400.2%

Advances from foreign customers

2,292,160

2,585,641

-11.4%

Trade payables

690,168

798,903

-13.6%

Accrued payroll and related taxes

110,115

90,483

21.7%

Taxes payable

69,442

75,152

-7.6%

Derivative financial instruments

353,256

586,843

-39.8%

Other payables

114,509

118,051

-3.0%

Total current liabilities

5,416,419

12,007,367

-54.9%

NON-CURRENT LIABILITIES

Borrowings and financing

6,593,297

96,191

6754.4%

Liabilities from lease operations

1,215,719

1,182,337

2.8%

Advances from foreign customers

-

626,116

-100.0%

Trade payables

4,857

5,965

-18.6%

Deferred income tax and social contribution

36,383

36,883

-1.4%

Derivative financial instruments

17,563

16,596

5.8%

Provision for tax, labor, civil and environmental contingencies

308,175

294,668

4.6%

Taxes payable

18,324

18,501

-1.0%

Other payables

135,642

167,247

-18.9%

Total non-current liabilities

8,329,960

2,444,504

240.8%

EQUITY

Paid-in capital

6,077,674

6,077,674

0.0%

Capital reserve

1,353,937

1,353,937

0.0%

Accumulated losses

(8,448,523)

(8,167,310)

3.4%

Other comprehensive income (loss)

(304,343)

(277,132)

9.8%

Total equity attributable to shareholders

(1,321,255)

(1,012,831)

30.5%

Non-controlling interest

6,100

6,177

-1.2%

Total equity

(1,315,155)

(1,006,654)

30.6%

TOTAL LIABILITIES AND EQUITY

12,431,224

13,445,217

-7.5%

24

7.5. Statement of Cash Flows

Cash Flows (R$ thousand)

06/30/2020

06/30/2019

%

CASH FLOW FROM OPERATING ACTIVITIES

Loss for the period

(281,291)

(168,894)

66.5%

Non-cash transactions

837,922

868,922

-3.6%

Depreciation and amortization

453,749

436,155

4.0%

Exchange, interest rate and commodities risk management

162,191

174,662

-7.1%

Losses (gains) in biological assets ¹

(213,829)

(93,397)

128.9%

Interest, exchange rate changes and inflation adjustments, net

487,071

56,974

754.9%

Losses (gains) on hedge operations

(41,228)

29,330

-240.6%

Deferred income tax and social contribution

29,770

133,575

-77.7%

Other non-cash transactions

(39,802)

131,623

-130.2%

Decrease (increase) in assets

244,540

(1,323,910)

-118.5%

Increase (decrease) in liabilities

(1,346,573)

340,758

-495.2%

Interest paid on borrowings and financing

(89,809)

(157,889)

-43.1%

Net cash provided by (used in) operating activities

(635,211)

(441,013)

44.0%

CASH FLOW FROM INVESTING ACTIVITIES

Decrease (increase) in short-term investments

(17,484)

67,830

-125.8%

Decrease (Increase) in provision for investment loss

1

-

100.0%

Additions to lease agreements

(136,139)

(1,617,191)

-91.6%

Increase in property, plant and equipment

(117,123)

(95,124)

23.1%

Additions to biological assets

(126,968)

(113,227)

12.1%

Increase in intangible assets

(190)

(6,475)

-97.1%

Net cash provided by (used in) investing activities

(397,903)

(1,764,187)

-77.4%

CASH FLOW FROM FINANCING ACTIVITIES

Additions to lease liabilities

136,170

1,617,191

-91.6%

Payment of lease liabilities

31,527

(136,814)

-123.0%

Borrowings and financing

859,770

1,912,948

-55.1%

Payment of borrowings and financing

(778,384)

(1,921,867)

-59.5%

Net cash provided by (used in) financing activities

249,083

1,471,458

-83.1%

INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS

(784,031)

(733,742)

6.9%

Cash and cash equivalents at the beginning of the period

1,174,943

1,189,112

-1.2%

Cash and cash equivalents at the end of the period

390,912

455,370

-14.2%

  • Losses (gains) from the fair value adjustment less estimated cost of sales of biological assets.

25

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Biosev SA published this content on 18 September 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 18 September 2020 07:24:01 UTC